Why Russia is shaking, but China is not

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

The General Secretary of the Communist Party of China Xi Jinping, in connection with the outbreak of a trade war with the United States, announced China's intention to increase imports. He noted that China is not chasing a positive trade balance. "Domestic demand is the main driving force behind China's economic development and remains a must to meet the daily growing needs of the people for a better life," the Chinese leader said.

The other day, Free Press expert, director of the Osnovanie Historical Research Foundation, Alexei Anpilogov, predicted that China would follow this path.

According to him, the Chinese Communist Party has developed a program to improve the living standards of more than 800 million Chinese. “In all the program documents of the Chinese Communist Party, there is a figure of 800 million Chinese whose living standards are supposed to be raised. They, according to the new social norm, should consume at the level of, if not the richest, but European countries. Thus, China, as it were, declares that it is ready to replace the Americans consuming its products with its own citizens. That is, China has a reserve for a trade war with the United States, without prejudice to its own economy,”the expert said.

That is, in fact, Xi Jinping, in a veiled way, declared the same US trade war, setting the task of increasing domestic Chinese consumer demand. At the same time, there will be a gradual switching of those production capacities that are now operating in the United States and other countries, to the domestic market. Thus, the current model should be replaced by a state model of a socialist economy that will reduce the level of social stratification in the country.

After the announcement of new anti-Russian sanctions by the United States, which hit our large companies such as RUSAL, the question becomes even more urgent: can Russia follow the Chinese path, increasing domestic production to meet domestic demand?

- Of course, Russia can follow the path of China, - says Aleksey Anpilogov. - I don't remember any religious or cultural-historical taboos on this score. Seriously, such an economic model based on satisfying domestic demand already existed in the Soviet Union. Although it must be understood that the USSR, like China, by the way, at the initial stage of economic development invested heavily in heavy industry and infrastructure. It was what we now call industrialization, thanks to which a new economy was created that made it possible to win the Great Patriotic War. At the same time, industrial products first of all went to the domestic market, and surplus raw materials were sold to the West. And high technologies of that time were bought in the West.

Of course, historical conditions developed in such a way that attention was paid to the consumer needs of the population in the last place, if we talk, for example, about light industry products. That is, we had advanced aircraft and missiles, and toilet paper came into use only in the 60s of the last century, decades later than in Europe.

As for China, even during the 2008 global crisis, about 40% of its GDP was switched to modernizing its own economy. This led to the fact that in the Chinese economy the rate of fixed capital renewal began to grow at a fantastic rate. At its peak, it was about 20% per year. By comparison, the US has a net capital renewal rate of 3.5%. That is, roughly speaking, the American economy is renewed every 30 years. And the Chinese one is many times faster.

In Russia, we can quite follow the path of increasing domestic production. To do this, you need to invest in production many times more than now. And no huge inflation, which liberal economists constantly scare us with, will not cause it. At least for the first 5 years, until the production is on its feet.

The experience of our Chinese comrades just says that first it is necessary to create advanced production facilities in the country, and then, due to the quality and cheapness of domestic goods, an increase in duties on imported goods, where necessary, the consumption of goods of our own production will grow. Thus, in particular, the curse of gold and foreign exchange reserves, which in Russia do not work for its own economy, will be resolved. This recipe has already been tested in other countries.

"SP": - Why is it not being introduced in Russia?

- Because the existing elite in the country is largely comprador. This part of the elite is determined to withdraw capital from Russia, even without their subsequent partial return. And if we start to act in the way described above, this elite will greatly lose their positions, or even be out of work. Of course, she tries to do everything to prevent this. The current oligarchs will have to spend money to support domestic enterprises. And this is a troublesome business.

Until recently, they were engaged in taking huge amounts of money from the state for the mythical support of the banking system. For comparison, from 2014 to 2017, more than three trillion rubles were spent on saving banks. And, for example, 1000 times less was spent on financing the Russian Academy of Sciences during this time. At the same time, many banks were saved not in order to preserve the banking system of Russia, but in order to preserve the system of withdrawing capital, often stolen, from the country.

Therefore, until the banking comprador elite is removed from the leading positions in Russia, it is difficult to talk about a full-fledged reorientation of our industry towards domestic demand, following the example of China.

"SP": - Often liberals say that in the USSR we had domestic production, but still everyone was chasing imports. Even today, if you choose between domestic and Italian shoes, a consumer with money will always choose imports. Will it not turn out that we will start producing goods in large quantities, but they will hardly find their buyer?

- You can recall that Japan until the middle of the last century did not really shine with the quality of its products, to put it mildly. When the Japanese entered the US market in the 50s of the 20th century, the name of the producing country was written as little as possible on the goods. Since before that it was believed that the Japanese are able to do well except that sticks for sushi. Therefore, for example, the phrase Japanese electronics sounded like an oxymoron.

You can also remember what China produced 30 years ago. Is that the Chinese thermoses were in demand in the USSR.

Both Japan and China took the path of modernizing their own economies. They invested, and China is still investing, in its own production.

And before that, Germany also took this path, when the iron chancellor Bismarck, in spite of England, which possessed the most powerful economy at that time, declared: "We will make and buy German." This policy ultimately led to the promotion of Germany to the world economic and political leaders.

I do not consider the Russian people lazy or mediocre. When necessary, we create the world's leading products.

In order for the economy to start developing to its full potential, a purposeful state policy is needed, which, unfortunately, we do not see yet.

The tone is still set by liberal economists who say - why should we spend money on the development of our own production, if it is easier and faster to buy abroad. That is why the advanced industries that have remained with us - aircraft construction, space, the nuclear industry - are stalled. Since it is difficult to find highly qualified workers, engineers, etc., that is, without a return on investment in our industry, we are doomed to gradual degradation of the remaining high-tech industries. There should be a general state policy, ranging from light industry to the space industry.

By the way, with regard to the food industry, we have already proven that our products can be no worse or even better than those produced in any part of the world.

Of course, it will take seven, ten years or more to restore some high-tech industries. But without this it is impossible to talk about the economic, and, ultimately, the political sovereignty of the country.

"SP": - You gave an example with China. However, it began its economic development 30 years ago largely thanks to the availability of cheap labor. There are not many people in Russia today who would agree to work for low wages in difficult conditions. Moreover, we are faced with the problem of an aging population and a reduction in the proportion of able-bodied citizens.

- It is necessary to take into account all the factors of production in the complex. Yes, Russia is not the cheapest labor force. And I just do not urge people to go out on an increase in the number of low-paid workers. But we have the cheapest resources in a wide variety of categories. The cheapest energy sources in the world can be made. They can be largely recycled close to the production site.

Now liberal economists do not like to remember that the gas central administration in the USSR had a plan to build factories for processing Siberian gas near its fields. It was possible to get cheap and high-quality polyethylene, polypropylene and a lot of other goods, which with a much higher surplus value would go for export and cover domestic demand. By the way, Saudi Arabia has now taken this path. And Mr. Gaidar in the early 90s hacked to death this project for the construction of gas processing plants in the bud.

Now we need to return to such projects. Yes, we do not have the best climatic conditions, not everything will be smooth with demography in the near future, but we have our own competitive advantages that must be used.