BEIJING — China is doubling down on the allure of its “liquid assets” as, ever more, its citizens turn to property investment to provide modest standards of living in a country where the working class and its employees are even worse off.
To finance that seemingly unstoppable growth, the People’s Bank of China boosted deposit rates last month by more than a full percentage point, despite a government pledge to reduce urban housing prices. A week later, the People’s Bank authorized financing for overseas investment, a move that analysts viewed as a means of averting onshore default on overseas loans.
Such moves put the Chinese government in uncharted territory. So China’s chief political message on Friday was one of blatant celebration.
On the eve of its largest state-sponsored industrial investment since the 2008 Beijing Olympics, state media broadcast color videos of employees of government-backed companies joining state executives in singing the anthem of the “New China.”
If that wasn’t evidence enough that China’s economic growth is vital to the Communist Party, State Council Information Office Director Li Ruogu made the case for the importance of the government’s efforts in an interview this week with the online publication Finance News.
“The Chinese New Year is the most important market event of the year,” Li said. “With an estimated consumption volume of 180 billion yuan (about $28 billion), the economic boom that the New Year is heralding is by far the most important.”
On the other side of the ideological spectrum, China’s Communist Party has sent foreign reporters a less ecumenical message: the head of China’s top political advisory body, Wang Qishan, said earlier this week that China’s $1.6 trillion stockpile of foreign reserves was solely to protect national security and pledged to continue investing there.
Rumors abound that those on the far left of the Party’s spectrum — think-tank economists, labor activists and academics in China’s university system — are seeking to find ways to use this cash to stimulate the country’s fragile economy and avert the possibility of the growth slowdown that economists are already forecasting.
Jack Ma is said to be in the vanguard of this movement. He runs the largest e-commerce company in China. According to sources in China’s security establishment, Ma has offered to export his expertise in Internet infrastructure, and other communication technologies, to help the Ministry of State Security.
Security personnel visit Ma’s home to ask about his wealth, and his billionaire son-in-law is frequent and frequent guest at luxury hotels, according to Wang. Also reported to be on Ma’s advisers is industry scholar Chen Jianchao, a senior scholar at Xiamen University who writes widely on the subject of the elite know-how that flow from a decade of explosive economic growth. (The Washington Post has requested information about Chen from the U.S. State Department.)
Government-funded research is the only way to procure this expertise, and China needs to develop it within China, says Wang, so the government should make sure that the technology is accessible to non-government agencies.
No country or agency has a legal right to such technology, he says, but that doesn’t mean it can’t be offered to as many people as it chooses.
“In China, there’s an environmental movement that feels very strongly that we need to filter out the Chinese contribution to the atmosphere,” says Wang. “If the technology is not filtered, it will have an impact.”
But Alain Bouchard, a researcher at the economic think tank CNES of Canada, said China’s large reserves won’t inspire the same kind of transfer of knowledge that happened under President Nixon when the U.S. tapped into its strategic metals reserves in the 1960s.
Nixon “wanted to advance the interests of the Chinese,” said Bouchard. “Now we’re talking about assets that in theory the State Council has to protect.”