The Chinese government has decided to fund subsidies for the purchase of air-conditioning units, cell phones, televisions, and other such technological goodies. These are all items that represent the ‘good life’, are fairly cheap and basic, and yet have been beyond the purchasing power of vast numbers of China’s rural poor.
This seems to be a pretty smart move:
- The peasants’ quality of life improves significantly;
- The peasants’ access to, and knowledge of, the markets for their produce improves significantly;
- The peasants are happier; therefore, a contributing factor to domestic political dissatisfaction is eased, the gap between rural and urban lifestyles is narrowed a little, and the Communist Party has slightly less reason to worry about internal unrest;
- Chinese domestic consumption is boosted; in the face of an economic downturn in the USA and Europe, and consequent decreases in consumer spending, China’s factories now have a bigger home market to absorb their output.
- As a result, fewer factories will shut down, and fewer workers will lose their jobs, when the US economy slows down. The CPC has another reason to sleep a little more soundly at night.
- A little more time is won for China to worry less about internal strains, and invest more in alternative energy – which will be even more needed as the demand for electricity to power all these new purchases skyrockets…
I wonder where the funds to provide these subsidies are coming from! Who is being taxed to pay for it? How will the middle classes feel, who probably skimped and saved for these things, only to have the poor now get subsidies? Or will everyone get equal subsidies? Nevertheless, it is an interesting idea.
Margot, the Marrakesh Mystic (and a Moroccan banker)
margotmystic.wordpress.com
Hi Margot.
I don’t think anyone would need to be taxed – I guess this is just another way for the Chinese government to spend a tiny part of its vast stockpile of foreign currency…