Hu Era > Xi Era?

One WeChat writer throws some shade on the current regime

I’m Jordan Schneider, Beijing-based host of the ChinaEconTalk Podcast. In this newsletter, I translate articles from Chinese media about tech, business, and political economy. If you were forwarded this email, for free weekly updates free to…

Around National Day, the entire Chinese media ecosystem from CCTV to anime site Bilibili was filled to the brim with nationalist content. The overarching narrative was simple: over the past 70 years of CCP rule, today under Xi Jinping is the best China has ever had it. However, Landlord Economics (whose NBA hot take we translated last week) instead of getting with the program chose to blow up the spot with a paean to the Hu Jintao years. Each graph and section should be read as an implicit critique of the Xi era. The author starts by taking shots at GDP growth, trade policy and housing costs, before coming to US-China relations.

China's development can be understood under two main lines, namely in terms of domestic affairs and foreign affairs. When weighing domestic achievements, economic development accounts for 80%; when measuring diplomatic achievements, China-U.S. relations account for 80 percent. It can be seen that economic development and Sino-US relations are the two most important elements in China's development.

There is also a delicate link between economic development and US-China relations, as Deng Xiaoping during his visit to the United States in 1979 once told Li Shenzhi [a small l ‘liberal’ academic famous for his critiques of the regime], who was accompanying him on the visit: "Looking back over the last few decades, all the countries that have had good relations with the United States have become rich."

Most devastatingly, Landlord Economics closes by praising Hu as an individual.

Thanks to the person who led China's development and progress in this decade, his pragmatic, low-key character of unquestionable integrity will always be worth studying. (他的务实、低调与高风亮节的崇高品德永远都值得后人学习.)

This piece really had some legs. While WeChat doesn’t tell you view counts past the 100k threshold, it does give you a hard number for how many shares a given piece receives. By looking at this channel’s past ratio of shares to views, it likely was viewed over 500,000 times, making it one of the biggest articles I’ve ever translated.

The article also illustrates the very edge of acceptable public discourse in China. Seeing as this piece had a huge viewership and Landlord’s next article on the NBA got censored, this piece surely didn’t fly under Tencent’s radar. So in 2019, it looks like you can still get away with this sort of oblique critique so long as it’s couched in praise the Party’s accomplishments.

If you’d like to help with future translations (I can pay!) or join the ChinaEconTalk wechat group, please add me on wechat at JordanSchneider. Lastly, my wonderful mandarin tutor is on Italki and looking for more business if anyone is interested in affordable Skype lessons.

2002-2012, The Golden Decade of China’s Development

Landlord Economics, translation by Pieter Velghe and Jordan Schneider. Oct 3rd, 2019.

With the celebration of the 70th anniversary of the founding of the People's Republic of China, we gained a deeper understanding of a strong China. The achievements of China in the New Era cannot be separated from the accumulation and inheritance of every past era.

To link with everybody’s focus and emotions of the past few days, let’s have a look at China's achievements during the period from 2002 to 2012.

The Size of the Economy

In 2002, China's economy was only $1.47 trillion, about 13% of that of the United States at the time;

In 2012, China's economy grew to $8.56 trillion, or 53% of that of the United States at the time.

If the size of China's economy was still on the same level of India’s economy in 2002, it is now already in the same grouping as the United States, which is an improvement of an extraordinary order of magnitude.

Foreign Trade

After China's accession to the WTO, China's foreign trade has made rapid progress. In the decade from 2002 to 2012, China's total imports grew from $295 billion to $1.8 trillion in 2012, and total exports grew from $325 billion to $2 trillion.

Chinese imports and exports from 01/1992 to 08/2019

It’s not only foreign trade, China's consumption, industry, investment and other sub-sectors have made great progress in the past decade. Haven’t you in those years detected an improvement in your own life and income?

Thanks to increased productivity and the layout of the global production chain, China became the factory of the world, earning a year-round trade surplus, and foreign exchange reserves grew significantly during this period, from $286.4 billion in 2002 to $331.16 billion in 2012 (see graph below), that’s another increase of an order of magnitude.

Urbanization and Housing Cost

From 2002 to 2012, China experienced the fastest urbanization in history, with the urbanization rate increasing from 39.09% to 52.57%. China's urban population surpassed its rural population for the first time in history. With an average annual urbanization rate of 1.3% annually, the urban population grew by 210 million in a decade.

From 2002 to 2012, China's housing prices also accompanied the upward trend of urbanization and economic growth, but the increase was relatively rational, as the overdraft on residents' debt was relatively small.

Taking the city of Shenzhen as an example as it is representative for the market, the average house price in Shenzhen rose from 5,533 yuan/square meter in 2002 to 18,729 yuan/sqm in 2012, although the increase was relatively big, compared with the growth of household income and GDP of the same period, it’s not too exaggerated.

housing cost trends in Shenzhen over the past twenty years

It is worth noting that the rise in house prices from 2002 to 2012 did not put unbearable debt pressure on residents, and as can be seen from the chart below, the increase in leverage ratio from 2002 to 2008 was very limited. The increase in house prices during this period was all contributed by real income growth. The financial crisis has opened up real leverage for residents, a trend that continues to this day, with the current (2019) resident leverage ratio exceeding 50%,  and if calculated as a denominator of disposable income, then it already exceeded more than 100%.

residents’ leverage ratio doubled once in six years time.

US-China Relations

China's development can be understood under two main lines, namely in terms of domestic affairs and foreign affairs. When weighing domestic achievements, economic development accounts for 80%; when measuring diplomatic achievements, China-U.S. relations account for 80 percent. It can be seen that economic development and Sino-US relations are the two most important elements in China's development.

There is also a delicate link between economic development and Sino-US relations, as Deng Xiaoping during his visit to the United States in 1979 once told Li Shenzhi [a small l ‘liberal’ academic famous for his critiques of the regime], who was accompanying him on the visit: "Looking back over the last few decades, all the countries that have had good relations with the United States have become rich."

China's economy took off in 2002-2012, and China-U.S. relations have also steadily improved during this period.

Between 2002 and 2012, trade between China and the United States grew from $147.3 billion to $536.1 billion;

China and the United States opened the first China-U.S. Strategic Dialogue in August 2005, strengthening consultation, cooperation and coordination in important areas like trade and economy, counter-terrorism and the DPRK nuclear policy.

On 9 October 2006, North Korea conducted a nuclear test in spite of the objections of the international community, triggering the North Korean nuclear issue. China and the United States worked closely together to promote the Six-Party Talks and North-South relations on the Peninsula improved again;

In May 2012, China and the United States held the fourth round of the China-U.S. Strategic and Economic Dialogue, and for the first time, China proposed a new concept of "coordination between the two countries" (C2), which was supported by the United States.

Cross-Strait Relations

The period from 2002 to 2012 was also the most cohesive period between Hong Kong, Macao and Taiwan compatriots and the Mainland.

On April 26, 2005, at the invitation of the Chinese side, Lien Chan led a delegation of the KMT to the mainland for a weeklong visit. Lien Chan’s trip to the mainland was known as the "Ice Breaking Tour".

This trip and the subsequent trip by Jiang Pingkun and Lien Chan to find relatives,  Vincent C. Siew “ice-melting” trip, James Soong's bridge-building trip, Wu Boxiong's “sunshine after rain” and “win-win” trip, after 2005 jointly commenced a new situation of effective communication and frank exchange in cross-strait relations.

The subsequent speed of the economic and trade development between the two sides exceeded everyone's expectations. In June 2008, the China Association for Relations Across the Taiwan Straits and the Taiwan Straits Exchange Foundation resumed consultations which had been suspended for nearly 10 years. Since then, the leaders of the two organizations have held eight talks, signed 18 agreements and reached two consensuses.

On December 15, 2008, direct air, sea and mail connections between the two sides of the Taiwan Straits were officially launched. Since then, the free exchange of compatriots on both Straits, trade, investment and other activities enjoyed unprecedentedly favorable conditions.

Good cross-strait relations have benefited all people, mainlanders travelling to Taiwan in group and individually has kicked off, and mainland tourists quickly became the number one tourist source for Taiwan's tourism industry, with already 2.42 million trips reached. Cross-strait personnel exchanges increased significantly, from 3.8 million in 2002 to 7.1 million in 2011. As of 2011, cross-strait personnel exchanges reached 16.86 million. The launch of the free travel of mainland residents to Taiwan and Fujian to Jinma has allowed direct exchanges between grass-roots on both sides to flourish.

The situation in Hong Kong is similar, according to the HKU People's Research Institute, the number of Hong Kong people that felt proud of being Chinese peaked in 2008 and at that time surpassed that of the people on the other side.

During the Wenchuan earthquake, Hong Kong people made generous donations, and the amount of donations from Hong Kong was much higher than in other regions, which shows the centripetal force of our compatriots in the face of the national difficulties.

Graph: “After coming back to the Mainland, do you feel proud to officially be a Chinese national?” (Red line: NO, blue line: YES). [Imagine these numbers in 2019…]

Follow the Past and Herald the Future

The prosperity of 2002-2012 was also the inevitable result of prior changes. In the decade before 2002, China undertook many structural changes, each of which laid the foundation for the next two decades: exchange rate alignment, real estate marketization, SOE reform, accession to the WTO and so on.

In the 1990s, China made every effort to build a socialist market economy, and overcame the impact of the Asian financial turmoil, and after the new century finally took off. In reviewing this "golden decade", one cannot forget the contributions of our predecessors.

My Wish

On the occasion of this national celebration, I wish the great motherland prosperity, I wish each of us in this era can realize their dreams, that life will be more prosperous, comfortable, free and harmonious.

Also thanks to the person who led China's development and progress in this decade, his pragmatic, low-key character of unquestionable integrity will always be worth studying.

也感谢那十年带领中国发展进步的人,他的务实、低调与高风亮节的崇高品德永远都值得后人学习。

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