Caged Tigers: Increasing Chinese Consumption By Sharing The Wealth

Why are Chinese people so reluctant to spend money?
Why are Chinese people so reluctant to spend money?


BEIJING - It is a well-known fact that Chinese people don't like to spend money. Since the 1998 financial crisis, China's policy makers have been trying to expand domestic demand, and in particular Chinese consumption, to let the "caged tiger" loose.

In other words, it is time that people dig into their savings.

Since 1998, the tiger is still in the cage and the government has not seen the result it was hoping for. Consumption as a share of GDP has not grown significantly, while the caged tiger seems to be growing fatter and fatter. China’s growth is investment-led -- not consumption-led.

In his last work report as Chinese Premier, Wen Jiabao said the challenge was to expand domestic spending. He said that the succeeding government should “enhance people's ability to consume, keep their consumption expectations stable, boost their desire to consume, improve the consumption environment and make economic growth more consumption-driven.”

Why are Chinese people so reluctant to spend money? Because they haven't got much money. And why haven't they got money? One of the major reasons is because the balance of China's national income is tilted to the side of government and enterprises. According to statistics, between 1990 and 2010, the per capita income of Chinese urban and rural residents only increased 10.4 times while China's total national income increased more than 20 times.

Between 1995 and 2008, the per capita income dropped from 55 % to 42% and the GDP per capita dropped by 12% while the corporates profit in GDP share went up by more than 9%.

Had the government’s share of the pie – our national income – been invested through fiscal expenditure on social security, the Chinese people would be less worried about the future and would dare to spend more. Unfortunately, the reality is that though China's financial investments in people's livelihood have gradually increased in the past few years, we have yet to find a solution for social security issues – healthcare, pensions and education. In this country, people face huge pressures in regard to education and housing costs. It is no wonder that people don't spend any money.

The fine are of wealth creation

Increasing consumption is not about creating a national pie, it is about the government finding ways to share the pie. During the 18th National Congress of the Chinese Communist Party last autumn, China's policymakers promised that the government would double both its 2010 GDP and its per capita income by 2020.

According to experts, if you take into account the inflation, for this to be achieved, per capita income growth has to exceed GDP growth. In other words, as long as the pie is not being shared, even if China's GDP continues to rise at a relatively high speed; the per capita income will not double by 2020.

Take Japan as a comparison. When Japan set the goal of doubling its per capita income between 1960 and 1970, its average per capital income grew at a rate of 11.5% annually – 1% more than its average GDP growth. Japan managed to reach to its target within seven years.

So what is the best way to share the pie? We believe that, first, wages have to increase and that the wage share of GDP has to increase too. Second, during the secondary distribution process, the population’s burden has to be reduced through tax reform.

Recently a Chinese tax official said that there is no more space to continually raise China's personal income tax threshold. A lot of complaints about the Chinese taxation system are due to the fact that it doesn’t take into consideration marital status, total household income and the number of dependents. The result is that the concession rate (deduction) doesn't fully reflect the taxpayers' burden. If the current classified income tax system can be changed to a comprehensive (integrated) income tax system, then the levy on ordinary people will be lightened.

China's economy has entered the medium-speed growth stage. Many believe in the national income being tilted to the government because this concentrated power can achieve more for China. However, from the overall economic point of view, sharing the national income pie with the people is the best way to increase China’s growth. Urbanization is regarded as the main engine of China's future economic growth. However it is impossible to sustain this engine's energy without increasing the country’s per capita income.

Increasing incomes is bound to drive consumption. Ultimately that's the main driving force of China's urbanization.

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What It Means When The Jews Of Germany No Longer Feel Safe

A neo-Nazi has been buried in the former grave of a Jewish musicologist Max Friedlaender – not an oversight, but a deliberate provocation. This is just one more example of antisemitism on the rise in Germany, and society's inability to respond.

At a protest against antisemitism in Berlin

Eva Marie Kogel


BERLIN — If you want to check the state of your society, there's a simple test: as the U.S. High Commissioner for Germany, John Jay McCloy, said in 1949, the touchstone for a democracy is the well-being of Jews. This litmus test is still relevant today. And it seems Germany would not pass.

Incidents are piling up. Most recently, groups of neo-Nazis from across the country traveled to a church near Berlin for the funeral of a well-known far-right figure. He was buried in the former grave of Jewish musicologist Max Friedlaender, a gravesite chosen deliberately by the right-wing extremists.

The incident at the cemetery

They intentionally chose a Jewish grave as an act of provocation, trying to gain maximum publicity for this act of desecration. And the cemetery authorities at the graveyard in Stahnsdorf fell for it. The church issued an immediate apology, calling it a "terrible mistake" and saying they "must immediately see whether and what we can undo."

There are so many incidents that get little to no media attention.

It's unfathomable that this burial was allowed to take place at all, but now the cemetery authorities need to make a decision quickly about how to put things right. Otherwise, the grave may well become a pilgrimage site for Holocaust deniers and antisemites.

The incident has garnered attention in the international press and it will live long in the memory. Like the case of singer-songwriter Gil Ofarim, who recently claimed he was subjected to antisemitic abuse at a hotel in Leipzig. Details of the crime are still being investigated. But there are so many other incidents that get little to no media attention.

Photo of the grave of Jewish musicologist Max Friedlaender

The grave of Jewish musicologist Max Friedlaender

Jens Kalaene/dpa/ZUMA

Crimes against Jews are rising

Across all parts of society, antisemitism is on the rise. Until a few years ago, Jewish life was seen as an accepted part of German society. Since the attack on the synagogue in Halle in 2019, the picture has changed: it was a bitter reminder that right-wing terror against Jewish people has a long, unbroken history in Germany.

Stories have abounded about the coronavirus crisis being a Jewish conspiracy; meanwhile, Muslim antisemitism is becoming louder and more forceful. The anti-Israel boycott movement BDS rears its head in every debate on antisemitism, just as left-wing or post-colonial thinking are part of every discussion.

Jewish life needs to be allowed to step out of the shadows.

Since 2015, the number of antisemitic crimes recorded has risen by about a third, to 2,350. But victims only report around 20% of cases. Some choose not to because they've had bad experiences with the police, others because they're afraid of the perpetrators, and still others because they just want to put it behind them. Victims clearly hold out little hope of useful reaction from the state – so crimes go unreported.

And the reality of Jewish life in Germany is a dark one. Sociologists say that Jewish children are living out their "identity under siege." What impact does it have on them when they can only go to nursery under police protection? Or when they hear Holocaust jokes at school?

Germany needs to take its antisemitism seriously

This shows that the country of commemorative services and "stumbling blocks" placed in sidewalks as a memorial to victims of the Nazis has lost its moral compass. To make it point true north again, antisemitism needs to be documented from the perspective of those affected, making it visible to the non-Jewish population. And Jewish life needs to be allowed to step out of the shadows.

That is the first thing. The second is that we need to talk about specifically German forms of antisemitism. For example, the fact that in no other EU country are Jewish people so often confronted about the Israeli government's policies (according to a survey, 41% of German Jews have experienced this, while the EU average is 28%). Projecting the old antisemitism onto the state of Israel offers people a more comfortable target for their arguments.

Our society needs to have more conversations about antisemitism. The test of German democracy, as McCloy called it, starts with taking these concerns seriously and talking about them. We need to have these conversations because it affects all of us. It's about saving our democracy. Before it's too late.

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