Giving The Chinese People A Bigger Slice Of The Economic Pie

The fourth U.S.-China Strategic and Economic Dialogue yielded an important reform: Chinese state-owned firms must turn over a bigger chunk of their profits to the government to help finance public spending. U.S. companies are pleased -- and ordinary Chine

Giving the people something to smile about (fab to pix)
Giving the people something to smile about (fab to pix)
经济观察报E.O/Kang Yi

BEIJING -- After years of public outcry, Chinese state-owned entreprises (SOEs) are finally going to give a larger part of their annual earnings to the government to help finance social spending.

This was just one of the outcomes of last week's fourth round of the U.S.-China Strategic and Economic Dialogue (S&ED) in Beijing. China committed "to increase the number of SOEs that pay dividends as well as to increase the amount of dividends actually paid."

The SOEs belong to the people. It is reasonable to ask that their profits be shared by the people. This has been put off for too many years.

It should be noted though, that the reason why the government agreed to this isn't due to suddenly finding a conscience, nor is it because the Americans are advocating social justice for the Chinese people.

The U.S. considers that Chinese state-owned firms are linked too closely to the government and the banks. Not only do they get loans at lower interest rates than private companies, they also get massive injections of government funds when necessary. The U.S. believes this constitutes unfair competition for American companies investing in China. Getting Beijing to agree to SOE dividend reform has been their goal for many years.

Preempting an American boycott

It's reported that U.S. have being developing legislation for boycotting Chinese state-owned enterprises. This would make the investment environment for China's state-owned enterprises overseas much more complicated.

It's very obvious that the reason why the Chinese government made such a high-profile commitment is because it's trying to distance itself from the accusation of "State Capitalism" and to erase the intricacies of its relationships with SOEs. It also wants to make it easier for its state-owned companies to invest overseas.

Regardless of this policy's agenda, what Chinese people want is for this policy to boost social spending, something it would definitely benefit from.

In order to help the government fullfill their pledge, we'd like to remind it -- as well as the SOEs -- of two things: First, the state-owned firms should not use the dividend reform to raise prices. Inflation in China has just started easing. Consumers are already overwhelmed by the repeated price hikes of oil and water.

A new economic context

It should be noted that many government-funded companies' profits have seen rapid growth year after year. They can easily turn over a higher proportion of their dividends. Passing their decreased profits onto consumers as price hikes will be seen by the public as further proof of their lack of conscience.

Second, the Chinese government should commit itself to redistributing these dividends directly to the people.

After all, in theory, the people are all shareholders in the state-owned enterprises. The current reality is that most of the SOEs' dividends are recycled in house, to be used for reform and development. Only a tiny proportion of their profits end up in public finances and the social security budget.

In view of this, unless state-owned firms change their behaviour, their image abroad will not be improved and a better use of dividends will be not be possible.

When the system of "State capital management budget" was started a few years ago, a lot of central government-funded firms were struggling with huge deficits. The proportion of dividends paid to the government was set at a very low 5% or 10%. Most often these dividends were recycled into the companies to improve their capitalisation.

Today, the environmental context has largely changed. Most SOEs' turnovers and profits have grown. It seems fair that they should contribute more to public finance.

These dividends should be transferred to the state budget to increase governement revenues. In turn, the government will be able to spend more on social security and pensions.

Even if this can't be achieved quickly, a timetable must be set. The public's unconditional generosity to state-owned firms should not be indefinite.

Read the original article in Chinese.

Photo - fab to pix

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The Food Truck, A Sign That The White And Wealthy Are Moving In

In San Diego, California, a researcher tracked how in the city's low-income neighborhoods that have traditionally lacked dining options, when interesting eateries arrive the gentrification of white, affluent and college-educated people has begun.

Balboa Park Spring Fling Food Truck festival

San Diego Food Trucks via Facebook
Pascale Joassart-Marcelli

SAN DIEGO — Everybody, it seems, welcomes the arrival of new restaurants, cafés, food trucks and farmers markets.

What could be the downside of fresh veggies, homemade empanadas and a pop-up restaurant specializing in banh mis?

But when they appear in unexpected places – think inner-city areas populated by immigrants – they're often the first salvo in a broader effort to rebrand and remake the community. As a result, these neighborhoods can quickly become unaffordable and unrecognizable to longtime residents.

An appetite for gentrification

I live in San Diego, where I teach courses on urban and food geographies and conduct research on the relationship between food and ethnicity in urban contexts.

In recent years, I started to notice a pattern playing out in the city's low-income neighborhoods that have traditionally lacked food options. More ethnic restaurants, street vendors, community gardens and farmers markets were cropping up. These, in turn, spurred growing numbers of white, affluent and college-educated people to venture into areas they had long avoided.

This observation inspired me to write a book, titled The $16 Taco, about how food – including what's seen as "ethnic," "authentic" or "alternative" – often serves as a spearhead for gentrification.

Take City Heights, a large multi-ethnic San Diego neighborhood where successive waves of refugees from places as far away as Vietnam and Somalia have resettled. In 2016, a dusty vacant lot on the busiest boulevard was converted into an outdoor international marketplace called Fair@44. There, food vendors gather in semi-permanent stalls to sell pupusas, lechon (roasted pig), single-sourced cold-brewed coffee, cupcakes and tamarind raspado (crushed ice) to neighborhood residents, along with tourists and visitors from other parts of the city.

Informal street vendors are casualties.

A public-private partnership called the City Heights Community Development Corporation, together with several nonprofits, launched the initiative to increase "access to healthy and culturally appropriate food" and serve as "a business incubator for local micro-entrepreneurs," including immigrants and refugees who live in the neighborhood.

On paper, this all sounds great.

But just a few blocks outside the gates, informal street vendors – who have long sold goods such as fruit, tamales and ice cream to residents who can't easily access supermarkets – now face heightened harassment. They've become causalities in a citywide crackdown on sidewalk vending spurred by complaints from business owners and residents in more affluent areas.

This isn't just happening in San Diego. The same tensions have been playing out in rapidly gentrifying areas like Los Angeles' Boyle Heights neighborhood, Chicago's Pilsen neighborhood, New York's Queens borough and East Austin, Texas.

In all of these places, because "ethnic," "authentic" and "exotic" foods are seen as cultural assets, they've become magnets for development.

Food vendor at outdoor international marketplace called Fair@44.

Fairat44 via Instagram

A call for food justice

Cities and neighborhoods have long sought to attract educated and affluent residents – people whom sociologist Richard Florida dubbed "the creative class." The thinking goes that these newcomers will spend their dollars and presumably contribute to economic growth and job creation.

Food, it seems, has become the perfect lure.

It's uncontroversial and has broad appeal. It taps into the American Dream and appeals to the multicultural values of many educated, wealthy foodies. Small food businesses, with their relatively low cost of entry, have been a cornerstone of ethnic entrepreneurship in American cities. And initiatives like farmers markets and street fairs don't require much in the way of public investment; instead, they rely on entrepreneurs and community-based organizations to do the heavy lifting.

In City Heights, the Community Development Corporation hosted its first annual City Heights Street Food Festival in 2019 to "get people together around table and food stalls to celebrate another year of community building." Other recent events have included African Restaurant Week, Dia de Los Muertos, New Year Lunar Festival, Soul Food Fest and Brazilian Carnival, all of which rely on food and drink to attract visitors and support local businesses.

Meanwhile, initiatives such as the New Roots Community Farm and the City Heights Farmers' Market have been launched by nonprofits with philanthropic support in the name of "food justice," with the goal of reducing racial disparities in access to healthy food and empowering residents – projects that are particularly appealing to highly educated people who value diversity and democracy.

Upending an existing foodscape

In media coverage of changing foodscapes in low-income neighborhoods like City Heights, you'll rarely find any complaints.

San Diego Magazine's neighborhood guide for City Heights, for example, emphasizes its "claim to authentic international eats, along with live music venues, craft beer, coffee, and outdoor fun." It recommends several ethnic restaurants and warns readers not to be fooled by appearances.

Longtime residents find themselves forced to compete against the "urban food machine"

But that doesn't mean objections don't exist.

Many longtime residents and small-business owners – mostly people of color and immigrants – have, for decades, lived, worked and struggled to feed their families in these neighborhoods. To do so, they've run convenience stores, opened ethnic restaurants, sold food in parks and alleys and created spaces to grow their own food.

All represent strategies to meet community needs in a place mostly ignored by mainstream retailers.

So what happens when new competitors come to town?

Food vendor at outdoor international marketplace called Fair@44.

Fairat44 via Instagram

Starting at a disadvantage

As I document in my book, these ethnic food businesses, because of a lack of financial and technical support, often struggle to compete with new enterprises that feature fresh façades, celebrity chefs, flashy marketing, bogus claims of authenticity and disproportionate media attention. Furthermore, following the arrival of more-affluent residents, existing ones find it increasingly difficult to stay.

My analysis of real estate ads for properties listed in City Heights and other gentrifying San Diego neighborhoods found that access to restaurants, cafés, farmers markets and outdoor dining is a common selling point. The listings I studied from 2019 often enticed potential buyers with lines like "shop at the local farmers' market," "join food truck festivals" and "participate in community food drives!"

San Diego Magazine's home buyer guide for the same year identified City Heights as an "up-and-coming neighborhood," attributing its appeal to its diverse population and eclectic "culinary landscape," including several restaurants and Fair@44.

When I see that City Heights' home prices rose 58% over the past three years, I'm not surprised.

Going up against the urban food machine

Longtime residents find themselves forced to compete against what I call the "urban food machine," a play on sociologist Harvey Molotch's "urban growth machine" – a term he coined more than 50 years ago to explain how cities were being shaped by a loose coalition of powerful elites who sought to profit off urban growth.

I argue that investors and developers use food as a tool for achieving the same ends.

When their work is done, what's left is a rather insipid and tasteless neighborhood, where foodscapes become more of a marketable mishmash of cultures than an ethnic enclave that's evolved organically to meet the needs of residents. The distinctions of time and place start to blur: An "ethnic food district" in San Diego looks no different than one in Chicago or Austin.

Meanwhile, the routines and rhythms of everyday life have changed so much that longtime residents no longer feel like they belong. Their stories and culture reduced to a selling point, they're forced to either recede to the shadows or leave altogether.

It's hard to see how that's a form of inclusion or empowerment.The Conversation


Pascale Joassart-Marcelli is a Professor of Geography and Director, Urban Studies and Food Studies Programs at San Diego State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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