The statement "without a well-functioning economy, political stability cannot be achieved" may seem all too cliché, but it remains true. In China's context, many challenges it faces are ultimately rooted in economic issues. Thus, improving the economy is not an issue in itself, the critical and unresolved question lies in how to actually do just that.
China's central government clearly places significant emphasis on addressing this economic challenge. As revealed by the Third Plenary Session, a series of policy measures have already been implemented. However, these policies face various disruptions and challenges, leading to ongoing disturbances in policy execution. This results in a peculiar cycle of deviations. In light of these difficulties, there is yet to be a well-developed solution, particularly the absence of a top-down strategic "overarching idea" that can bring about systemic change, one that is steady, objective, and capable of providing clear direction.
The lack of such an effective policy "overarching idea" makes it easy for extreme measures to emerge. One such extreme suggestion is money distribution such as the proposal to issue consumption vouchers. In fact, this idea has already been tried in various regions, but it has faced numerous problems, such as consumption being brought forward and the limited scale of the vouchers. Although some empirical studies indicate that consumption vouchers can increase consumption by 3.5 times, the overall effectiveness has been less than ideal. The most significant issue lies in the scale and intensity of the measure, as the government simply lacks the financial resources to sustain the issuance of consumption vouchers.
As the economic downturn persists over an extended period, societal tensions are gradually being released, manifesting in an increasing number of severe incidents, with a recurring pattern of disturbances that further complicate the situation. In response, current policy measures predominantly focus on maintaining social stability. For instance, certain regions and communities have implemented investigations targeting individuals categorized under the "four lacks and five frustrations" criteria. The "four lacks" refer to those who are "without a spouse, without children, without stable employment or income, and without property or other assets", while the "five frustrations" are those who experienced "failed investments, personal setbacks, fractured relationships, psychological imbalances, and mental disorders". In reality, the population fitting these criteria is alarmingly large, with an estimated 50 million individuals. Consequently, relying solely on traditional methods of "stability maintenance" in the face of the prolonged economic decline may prove inadequate, potentially becoming an unsustainable fiscal burden that the government is ill-equipped to bear.
Under the current policy approach, both "distributing money" and "maintaining stability" are ultimately unfeasible if pursued as independent, isolated measures. This represents an extreme form of policy drift, oscillating between one extreme and the other, and thus failing to effectively address the core issues.
Reform can, in principle, serve as a solution. However, it is an inherently time-consuming process. From the design and formulation of reform policies to their implementation and eventual impact, even well-structured and reasonable reforms require a considerable amount of time before showing tangible results. In light of China's prolonged economic decline and the accompanying challenges, the question arises whether there is enough time to allow for such delays. This is an issue that undoubtedly necessitates careful and thoughtful consideration.
A further challenge lies within the reform process itself. The current framework is marked by a "division of work" approach, involving China's numerous ministries, commissions, and agencies. This structure has led to the announcement of three hundred reform tasks by the Third Plenary Session. However, without Deng Xiaoping-like reformers, it is highly improbable that these reform initiatives can be a cohesive, systematic approach that ensures comprehensive coordination and strategic balance. Instead, the reforms are likely to remain fragmented, with each addressing isolated issues rather than pursuing an integrated, holistic vision. In this context, the successful and high-quality implementation of all three hundred reform tasks, in accordance with the objectives outlined by the Third Plenary Session, seems unlikely. The core issue is that effective reform requires a top-down strategy, where central leadership takes decisive control and offers a "overarching idea" to unify and direct the process.
In the face of the current difficulties and challenges, what is the best course of action?
There may be two key factors to consider. The first lies in comprehensiveness. Only with comprehensiveness can there be a system, and only with a system can there be a macro-level vision and coordinated planning. This is essential for fulfilling the reforms' objectives and avoiding fragmented, isolated policy ideas that operate under the illusion of immediate success. The second key factor is the central leadership's "overarching idea" to generate top-down policy momentum and create impactful macro-outcomes, this "overarching idea" must be rooted in a form of "comprehensive welfarism" grounded in socialist principles.
The so-called "comprehensive welfarism" is essentially a guiding ideology, with the core of the policy operation being the provision of an annual per capita subsidy amounting to RMB 8 trillion. While this figure appears substantial, it essentially involves reallocating the annual RMB 8 trillion from land transfer fees, with additional contributions from government spending and project investments, into residents' welfare, essentially distributing the funds directly as subsidies. This represents a large-scale stimulus plan for consumer demand. The general distribution approach would involve an annual subsidy of RMB 10,000 to 20,000 per adult. At the same time, some necessary, gradual supply-side welfare reforms would be implemented, with the goal of constructing a comprehensive policy framework. These reforms would include:
1. Equal access to healthcare services: This refers to a comprehensive overhaul of public healthcare, eliminating the current increasingly unsustainable medical insurance system and implementing universal free healthcare, thereby addressing healthcare issues on the supply side. Simultaneously, the establishment of high-end private healthcare services should be encouraged, with taxes levied on them to subsidize public free healthcare. On this issue, the focus is not on the question of availability, but on the practical solution.
2. Solving the issue of national pension security: This involves strengthening the construction of "health and wellness cities" and using urban renewal to carry out necessary renovations to existing real estate. The promotion of pension insurance should also be accelerated to ensure comprehensive elderly care, thereby indirectly increasing the welfare supply.
3. Streamlining government departments: This involves large-scale reductions in government bureaucracy to improve efficiency and save funds, which can then be redirected toward increasing social welfare provision.
4. Overall welfare supply: This is divided into two components, namely welfare provision and consumption vouchers. Both should be distributed simultaneously within a unified scale, thereby stimulating economic growth and boosting consumption.
5. Amendments to labor law: There is the need to stregthen the supply side for Chinese enterprises by encouraging and rewarding labor. A cultural shift that honors labor and stigmatizes idleness should be cultivated, so as to avoid the potential negative effects of Western welfare models on work incentives, and prevent the emergence of a "new rentier class". This would help maintain the competitiveness of Chinese enterprises and eliminate the widespread social phenomenon of exploiting legal loopholes to extort corporate welfare.
6. Reducing government projects and eliminating blind investments: Government projects must align with consumer demand, not simply follow economic growth. Large projects should be halted or postponed, and foreign aid should be prudently managed.
7. Amendments to criminal law: The criminal law should align with laws that promote the private economy, ensuring the protection of private property. Violations should lead to direct criminal penalties, with harsher sentences. This aligns with the spirit of the Third Plenary Session.
These measures of "comprehensive welfarism" are effectively a dual-action strategy involving both the supply and consumption sides, working in tandem through coordinated efforts. Therefore, the seven major reforms should be pursued simultaneously, with parallel implementation, to achieve optimal policy outcomes. In terms of policy execution, it is crucial to ensure the effectiveness of these initiatives, ensuring that all seven of them operate in unison, progressing and completing together.
"Comprehensive welfarism" offers several advantages in terms of policy implementation. First, welfare becomes a lever for regulating the socio-economic landscape. For individuals engaged in illegal or unethical behaviors, or those opting for a passive lifestyle, welfare benefits can be revoked, making welfare supply a powerful policy tool. Second, it gradually fosters economic growth through consumption. While an exclusive focus on consumption is inadvisable, China's inevitable shift toward a consumer-driven society becomes more apparent, especially when investment struggles to effectively stimulate the economy. Strengthening the consumption side can facilitate balance and better regulation. Third, consumption amplifies the Chinese market, enlarging and strengthening its domestic demand, which in turn can enhance the country's position on the global stage.
It should be noted that "comprehensive welfarism" is a form of welfarism based on socialist principles. It balances both production and consumption, avoiding extremism. In fact, there is nothing inherently wrong with welfarism; it is a product born from economic crises and serves as a response to such crises. The concerns typically revolve around potential flaws, such as hedonism, which exacerbates what is known as "lying flat" in China, as well as the risk of creating a dependency culture. However, these flaws and problems can be effectively addressed by focusing on the design and application of welfare policy levers within the framework of institutional advantages.
The "comprehensive welfarism" here should be understood as a preliminary policy concept, a practical application of theoretical tools, aimed at analyzing and discussing the current objective issues and seeking integrated, top-down solutions. I believe this is key to generating a momentum effect for China's current sluggish socio-economic situation and could potentially become the "overarching idea" that helps the country's socio-economic landscape break through its current challenges.
