On Development In China – OpEd

By Chan Kung*

The effort to eradicate poverty in China is now being carried out in full swing. This is considered to be something positive, as it is better to pay full attention to this matter than showing indifference. But how should society take care of the poor, people with less abilities, honest and law-abiding people who always like to complain as well as those prematurely old middle class? As this group of people always make up the majority in any country, hence they cannot be ignored by the social administration as this ignorance is a serious mistake on the path of development.

It is not advisable for the developing countries to blindly copy the work carried out by the developed countries. The reason is that there are differences between the vulnerable groups, that is, those groups that are inferior, honest and law-abiding in every country. This group of people can only understand the simple reason to get rich and can only follow the simple ways to get rich like speculation and following the trend, since these are the easier ways to make money.

Real estate and stock speculations are such simple ways to get rich. If it is complicated, can economists do it? The opposite is true for high technology, which is not something the average middle class can do. Therefore, real high technology has to be developed in China but this falls on to the hands of the minority belonging to the elite as a path to richness.

If a society cannot provide a few simple ways of getting rich, it will be very dangerous, leading to lifelessness, increased social discontent and intensification of social pressure which will explode eventually. To solve this problem, there is a need to provide simple ways to get rich. Complicated matters can be turned into simple games so that everybody can participate such as the pseudo-high-tech that exists today.

This is actually quite simple. All needed to be done is to choose some so-called high-tech products and ensure everyone can take advantage of it. A good example is Jack Ma’s e-commerce and various platforms for financial management. All these activities can be turned into simple ways of making money like stock and real-estate speculation as these types of activities are easier for people to participate and follow, allowing them to make money without much thoughts.

It seems that if China wants to enjoy vitality and stabilize itself to escape from poverty, it still needs to provide a simple way to make a fortune in which stock and real-estate speculation may be the necessary choices. Can people involved in manufacturing make money easily? It was definitely possible in the past as the comprehensive cost of society was very low, but things are different now. The cost of manufacturing is higher now and cannot be reduced at this moment. Therefore, making money in the manufacturing industry is far more difficult than making money in the high-tech industry.

In reality, those who can do actual business are not ordinary people. I believe now is the time for China to properly loosening itself and relax properly. If the U.S. President Donald Trump dares to speak up and let manufacturing return to a high-cost society like the United States, China too should have the courage and ability to control and provide a few simple ways for the social middle class to generate wealth.

Economists can do little to help in such situation, as many of them do not understand China, its society, and development. They mostly merely understand the numbers and figures, and some of them might not understand these well. In China’s affairs, we must look further at the distant scenarios. China can provide several simple ways to make a fortune. Although there is risk, such risk is considerably smaller than the risk of social unrest. This effect can be controlled within the scope of financial regulation and certain markets. 

Can such opportunity for people to pursue simple ways to make money cause issues? In my opinion, there is not much of a problem. Such ways can be regulated, that is, adjusted and controlled. This include real estate, stock and capital speculations (i.e., investment and financing), and these are all usually simple way to make money. If problems occur, that would be mostly in a few professions and industries. This exists within the scope of regulation and also allows the force of regulation to play its role and value. Sometimes although the problems appear to be huge, yet from the macro perspective of society, they are still something minor in the bigger picture.

The other issue is speed. All the problems in China are related to the problems of speed, as we have mentioned previously. The reason is that if you can control speed, you can control risk by controlling the speed. Reasonable speed and reasonable pursuit can turn major problems into smaller issues.

Final analysis conclusion:

On the occasion of the Chinese New Year, let us consider the future from a realistic perspective. As a think tank researcher who is about to retire, I feel uncomfortable to deliver such message but I do not have much options. I do not know which parts can be loosen up. This actually depends on the numbers and figures, and this belongs to the field of the economists. 

It now appears that it is necessary to find at least certain ways and sectors for the capital flow. Only when the capital starts to accumulate can there be simple ways of generating wealth. There is only one place that seems to be the place where many people think they can find opportunities and move ahead. This is the wealth-creating place. China is a huge country, but as a huge country, it cannot make full use of the space exists in such a big country to provide simple opportunities to create fortune. This indeed is something pitiful. 

*Founder of Anbound Think Tank in 1993, Chan Kung is now ANBOUND Chief Researcher. Chan Kung is one of China’s renowned experts in information analysis. Most of Chan Kung‘s outstanding academic research activities are in economic information analysis, particularly in the area of public policy.