China stuck with lop-sided economy as consumers ignored: Report
New Delhi, April 13
If China continues pursuing productive grandeur regardless of consumers' preferences, the world's leading industrial nation will get stuck with a lop-sided economy that becomes ever harder to rebalance, according to an article in The Wire, a New York-headquartered global digital magazine.
The article highlights that while China's "Marxist developmentalist approach" cares about demand too, it has to serve "modern science, technology and the means of production." Demand generated by building factories, purchasing machinery, constructing roads, and adding data centers is therefore prioritised over household consumption.
It points out that China's new Five-Year Plan describes "boosting domestic demand as the strategic cornerstone." But far more prominently, it instructs the party-state to pursue a full-spectrum techno-industrial transformation: upgrading traditional industries such as metals, textiles, and appliances; strengthening emerging sectors including electric vehicles, batteries, and biomedicine; and accelerating deployment of frontier technologies like quantum computing, fusion energy, and embodied AI.
To a Marxist developmentalist, individuals are workers before they are consumers. Their capacity to consume must be grounded in earned income rather than fiscal redistribution. The Five-Year Plan's primary prescription for boosting consumption is therefore to raise employment and compensation from work, rather than building the sort of welfare system economists outside China have long urged on the government.
China's heavy investment in supply-side capacity has paid off spectacularly. Its industrial firms continue to move up the value chain, its exports steadily capture global markets, and its tech companies increasingly set global trends, the article observes.
However, despite these techno-industrial triumphs, the economic maladies Xi warned of five years ago have only become more entrenched.
China's Marxist developmentalist policymakers may believe that their relentless cultivation of the country's productive forces will eventually set off a positive feedback loop of industrial transformation, skills upgrading, rising incomes, and expanding consumption.
Yet the danger is that a vicious cycle instead takes hold, in which chronic excess supply crushes corporate profits, depresses wages and discourages consumer spending - leading Chinese companies to seek to export ever more to markets that are becoming unwilling to absorb its excess capacity. The fixation on production may harden, rather than dissolve, the economic blockages that have so concerned Xi, as the state and the consumer do not always have the same priorities, the article explains.
It cites the example of Chinese state media publicising 2026 as the "auspicious inaugural year" for commercial spaceflight. In response to a central government "action plan," more than 600 space companies have emerged, several of them developing space tourism.
Chinese officials envision "an era of mass consumption" of space travel. But a population grappling with job insecurity, stagnating income and contracting wealth is probably not going to prioritize sightseeing in outer space, the article laments.
— IANS
Reader Comments
The space tourism example says it all. When average citizens are worried about their jobs and incomes, grand projects like that seem out of touch. It reminds me of debates we have in India about funding mega-projects versus basic welfare. The balance is so crucial.
China's industrial success is undeniable, but this report highlights its fundamental weakness. An economy needs a strong domestic consumer base for long-term stability. Their model creates massive overcapacity which they then try to dump on other countries, including India. We need to be very careful with our trade policies. 🇮🇳
Respectfully, I think the article simplifies a complex system. China lifted millions out of poverty through its focus on production and infrastructure. Isn't that the first step? Consumption comes later. India's development path might be different, but their method has yielded results for decades.
The "workers before consumers" ideology is fascinating. But in the end, people are both. If wages don't rise meaningfully, who will buy all the EVs and fancy appliances they're making? This is a lesson for all developing economies, including ours. Make in India must also mean *Buy* in India.
As an outsider observing both India and China, the contrast in economic philosophy is stark. China's top-down, supply-push model is hitting its limits. India's more consumption-led growth, while slower in some sectors, might prove more sustainable in the long run. The demographic dividend only pays out if people have money to spend.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.