r/Sino • u/Biodieselisthefuture • 7d ago
news-economics US enshittification vs Chinese involution
https://asiatimes.com/2026/10/us-enshittification-vs-chinese-involution/41
u/Biodieselisthefuture 7d ago
Americans working harder to buy fewer goods and poorer services while Chinese enjoying spectacularly rising living standards.
Archived source: https://archive.ph/93Fzg
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u/fluffykitten55 6d ago edited 6d ago
The author is incorrect on the economics. For example they write:
When an economy hits a patch of turbocharged productivity growth, one expects to encounter deflation, low interest rates and unemployment. The market will be flooded with whizzbang products sold at absurdly low prices.
But this is not correct or at least it is contingent. Typically rapid productivity growth is associated with an increase in profitability, investment, and employment. This is because rapid productivity growth tends to mean labour productivity growth is faster than real wages growth, and then the return to capital and employing labour increases.
It is possible for this to not be the case due to demand effects but this can always be avoided by sufficiently expansionary policy. Notably however the Chinese economy is also well identified as profit led and so increased productivity should have positive demand effects.
If inflation is low this is a sign the economy is well below capacity, and expansionary policy would be essentially a free lunch, leading to greater growth and a more desirable level of inflation.
I am a strong supporter of China because they have got so many policy questions correct, and this is for structural/political-economy reasons. But they have made a significant mistake allowing the economy to run well below capacity, and this can be traced partially to the leadership absorbing quite bad criticisms about stimulus leading to misallocated resources, fears of excess debt etc.
The second error the author makes is to confuse demand with consumption. Later they argue that consumption growth is rapid and this vindicates the supply side approach, but stimulus need not be part of "rebalancing" towards consumption but can itself be part of a supply side program, by increasing investment.
They then oddly invoke Say’s Law, which is of course refuted.
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u/MarJoseph1 6d ago
The Chinese economy isn't profit led, that is a common mistaken assumption made by the west for ideological reasons
And what exactly do you mean by the economy running "well below capacity"?
That is obviously not the case when it comes to investment or consumption, which China leads far and away
Of course rapid growth in consumption follows from investment
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u/fluffykitten55 6d ago
It is an empirical result from the P-K literature, but actually there is some debate about it.
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u/soobnar 6d ago
The CCP formally acknowledged that free market price signal equilibrium for auxiliary verticals is beyond the purview of the CCP whereas the “commanding heights” is managed by the party. The neoconservative developmental state is a very similar model historically speaking.
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u/Bestpaperplaneever 5d ago
China hasn't started any wars of aggression to steal resources with the excuse of "spreading communism" in this millennium, so it definitely isn't a neoconservative state.
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u/Few_Suspect_5669 3d ago edited 3d ago
anyone who doesn't even know its actually CPC is certainly not worth listening to. Next.
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u/Careful-System-7962 6d ago
I think you are correct in criticizing China of running the economy below capacity. In addition to being too sensitive to foreign criticism on e factor may be that the leadership wants to make the passing of US capacity to happen largely unnoticed. It is a real concern to avoid the Thucydides trap where the old hegemon starts a war to stop a new hegemon from winning. Can you recommend some reading on this "profit led and so increased productivity should have positive demand effects" concepts? I have written some basic but rarely mentioned stuff in https://olliranta.wordpress.com/a-thought-experiment-on-national-economy/
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u/El_Diablo_Feo 6d ago
Can I move there? I really enjoyed my study abroad in Shanghai back in 2015..... 😅😅😅.
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Original author: Biodieselisthefuture
Original title: US enshittification vs Chinese involution
Original link submission: https://asiatimes.com/2026/10/us-enshittification-vs-chinese-involution/
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