In an interview with Paul Jay of The Real News Network, Minqi Li, assocate professor of economics at University of Utah, rases most of the points we’ve been raising about the just-announced Chinese reforms, namely that they are manifestations of a neoliberal economic structure designed by and for the benefit of the rich.
Chinese Reforms Make Rich Even Richer
From the transcript:
LI: And there is nothing in the decision that would suggest the Party cares very much about a possible income redistribution that is in the favor of labor. Instead, it appears most of the decisions are targeted towards raising the income for the capitalist. And so that would be against the possible macroeconomic and the social rebalancing of the Chinese economy.
JAY: By reducing the role of the state, and particularly in the banking sector, they seem to be going more and more to essentially and actually an American model of capitalism, which is not some great success here.
LI: Yes. And one of the surprising thing is that there’s no reflection of the failure of global neoliberalism in this Party decision at all.
And, of course, in one of the decision, it does say it’s going to raise the dividend payment by the state-owned enterprise to the government, which is supposed to be used for social welfare. But that is actually going to be quite insignificant. The overall Chinese economy right now is between 50 trillion to 60 trillion yuan. And then the total before-tax profits from the state-owned sector right now is only about 1 trillion yuan. So it’s only about 2 percent of China’s GDP. And then the state-owned enterprises already pay about one-third income tax on their profits. So if you just take about 30 percent from the after-tax profits, that may be just 0.5 percent of China’s overall GDP. So that’s not going to really increase the social welfare a lot.