Some weekend viewing and reading

The trial of Jimmy Lai continues, with judges suggesting that more of his opinions – eg that Xi Jinping has put China onto a dangerous path – could be ‘inciting hatred’…

Lai, 77, told his national security trial on Thursday that he thought Xi did not understand international affairs and that the Chinese president’s “ascendance” had changed “everything” in the Communist Party.

…The court heard that, in an episode from September 17 that year, Lai warned that China was a threat to the world and said the country’s “war wolf attitude” would not change unless Xi stepped down.

“I was just stating the fact that Xi Jinping doesn’t understand world affairs, he thinks that to deal with the world is the same as to deal with the people in China,” he told the court.

Lai said he was not suggesting that China wanted to make the world “subservient” but maintained that the country was forcing its way in international affairs.

These are simply ideas. They are hardly unique, or original, or in many quarters even very controversial. If such thoughts are criminal, half the world’s journalists, economists and IR academics will need to be jailed.

The Standard’s editorial dismisses claims that civil service pay cuts would lead to lower salaries in the private sector…

It is a fallacy to say that cutting civil service wages would lead to a major impact on the private sector payrolls.

If both were, indeed, ever connected, it was due to the annual pay trend survey commissioned by the Civil Service Bureau. However, even this connection has been one-way only: the administration refers to private payrolls as it reviews the wages of the civil service.

It would be rare for private firms to give equal weight to civil service pay as they conducted staff pay reviews.

…[Lawmakers’] argument is a total fallacy…

George Magnus on the Chinese government’s economic priorities for next year. Like many commentators, he expects much of the focus to be on stimulating consumption. Except this seems to go against the leadership’s basic economic instincts. 

Despite running what is supposedly a socialist system, Xi Jinping has a bias against welfarism. So measures to broaden health and retirement coverage, which would encourage consumer spending, will probably be limited. Beijing’s leaders also seem to have a hang-up about consumption in general, which they see as a ‘wasteful’ use of wealth that could be channeled into investment and production. The obsession with output is an authentic socialist/Leninist/Stalinist thing. 

Both these tendencies are based on an assumption that the people serve the economy (or state), not the other way round. After all, what is the point of an ‘economy’ – which at heart is a bunch of people – if not to enjoy the benefits of productive lives? 

Magnus is also on DW on YouTube.

For fans of whataboutism: for all its problems, the PRC has not so far come close to having nominees for top public-health positions who say polio vaccines are bad and unpasteurized milk is healthy, or Treasury wannabes proposing the conversion of reserves into Bitcoin magic beans. 

The Wall Street Journal on China’s slide into deflation…

Prices for goods leaving Chinese factories have fallen year-over-year for 26 consecutive months, dropping 2.5% in November from a year earlier, and there is little sign of them turning up again soon. China’s gross domestic product deflator, a broader gauge of price levels across the economy, has been in negative territory for six consecutive quarters, the longest stretch since the late 1990s.

…The fear is that deflation is becoming ingrained in China. As falling prices sap profitability, companies could postpone investments or shed workers, leading more people to cut back on spending. Others might put off purchases because they think prices will drop even more.

Perhaps the greatest problem is that debts grow in real terms – the opposite of being inflated away.

Japan struggled for decades after its bubble burst. Hong Kong went through a five-year period of deflation ending after SARS in 2003. 

One textbook solution is a serious currency devaluation, which gives everyone a big pay cut but also gets consumer prices moving up again – so at least they have an incentive to spend. This would massively annoy trade partners already upset at China’s excess production being dumped in their markets.

Another way to stimulate inflation is to lower interest rates, but this could encourage more debt and more excess investment, which created China’s bubble in the first place. It also encourages capital flight.

Japan considered negative interest on bank savings (so the bank would deduct money from your account) in an attempt to boost spending. They even sort of considered putting an expiry date on banknotes, so people couldn’t stuff cash under their mattresses.

Ultimately, it’s likely to be a long, slow grind.  One thing Hong Kong officials did to get property prices moving again was (in effect) encourage sales of real estate to Mainlanders. China doesn’t have an equivalent option. 

In Asia Times, Bill Emmet, former Economist editor, on a bad month for dictators…

The proven weakness of the anti-Western axis means that the attractiveness of China as an alternative global leader has diminished. China’s economy remains important but is now suffering from the sort of slow growth and debilitating deflation that made Japan stagnate during the 1990s. Countries of the so-called “Global South” will not want to antagonize China nor to lose its money, but they will be more open to alternative offers from the West.

YouTube video of Japanese complaining about over-tourism. ‘Too many gaijin!’. The perils of having a cool country. Should resonate with Hong Kong people who resent their neighbourhoods being swamped with squatting, cake-buying Mainland selfie-takers. Local officials and tourism-related workers wish that foreign tourists would get away from predictable districts of Tokyo and Kyoto. (Rule of thumb: if you’ve ever heard of it, don’t go there. Far more interesting to get a bus or train to a small town and wander around in a place where people might actually be happy to see you.)

Also on YouTube, from a few years ago – a UK documentary about growing up in a Chinese takeaway.