China's discourses: Public security law amendment; 'Japanification' debates; a Buddhist scholar's insights on spiritual life in today’s China
5 essential discourses to gauge China's latest social and economic temperature
Gain insight into the latest social and economic developments in China through our curated selection of five pivotal discourses. These discussions have been chosen for their relevance and wide-ranging impact, showcasing significant structural shifts currently unfolding in China - some being controversial topics that resonate deeply in the community. Despite their importance, these conversations often remain underrepresented in mainstream Western media.
Today, we highlight discussions on the proposed legislation that aims to penalize those who "hurt national feelings," the disparity in per capita GDP between China and developed economies, and the ebb of China's internet and real estate sectors. Additionally, we present perspectives on the emerging narrative around the potential "Japanification" of China's future, as well as insights from a Buddhist scholar on the spiritual life in today's China.
Are people For or Against laws that punish “hurting national feelings”? What does that reveal about Chinese society in general?
A lot of public debate is taking place right now over the draft amendment to Public Security Administration Punishments Law, and especially Article 34 regarding punishment against spreading words and putting on clothes that may "hurt national feelings".
In Article 34, two clauses have been added, which have caused a lot of controversy:
Article 34: Whoever commits any of the following acts shall be detained for not less than five days but not more than ten days or shall be fined not less than 1,000 yuan but not more than 3,000 yuan; if the circumstances are serious, he shall be detained for not less than ten days but not more than fifteen days and may also be fined not more than 5,000 yuan:
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2): in palace venues or by forcing others to wear or use clothing or symbols that damage the spirit or feelings of the Chinese nation; (Newly added)
3): producing, disseminating, propagating or displaying items or statements that damage the spirit or feelings of the Chinese nation. (Newly added)
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It's not hard to imagine the criticisms this type of legislation can stir. Even Sisyphus Review, a popular and otherwise pro-law & order blogger, also believed this legislation is too vague, and will allow too much room for abuse in his latest post.
However, he was shocked by the public sentiment.
He observed an online poll participated by over 30,000 people. The question is "Are you for criminalizing hurting national feelings?"
Surprisingly, over 58% voted For, and only 38% voted Against.
The poll details do not look fake and makes sense geographically. Only Shanghai-based respondents, who are usually more liberal, have an Against camp (48%) enjoying a slight edge over For camp (46%). In Beijing, also a Tier-1 city, For (48%) vs Against (47%). Beijing + Shanghai with 2% of national population, account for 20% of this vote, so this poll is already heavily skewed toward the Against camp. Therefore, if this poll were to be taken to a pool that represents more of the wider society, you can easily imagine the For camp taking up over 90%. This happened all despite the fact that even the poll organizer took an obviously “Against” frame in introducing this poll.
The author concluded that urban elites should be careful about what they wish for. If China were a 1-man-1-vote system, "you thought we would elect a Ronald Reagan, but in fact you will only get a Hugo Chavez", stoking and capitalizing on strong populist sentiments. Such is the reality in China and how the 基本盘(the “core constituency”) look like.
Why does East Asia still lag behind the West in terms of per capita GDP by a huge margin? Popular, pro-industry blogger Ningnanshan has a take
Ning first marveled at the fact that despite East Asians being among the hardest-working and smartest people, in general, their economies lag behind the West in terms of per capita GDP. Even Japan only ranked the 68th. Only Hong Kong made to top 30 list.
Ning speculated 3 reasons for this phenomenon:
East Asia has always played a catch-up role to the West. For most of the technologies in the last few centuries, it’s always the West who did the 0-to-1 work. So a gap is only natural.
US military presence and political influence essentially ensure that it can place a cap on allies’ development through unequal treaties and arrangements.
Here the author also pointed out US military also exerted great influence on China’s economic development. If China lost the Korean War, the heavy industry development wouldn’t take place in Northeast China.
Super-low birth rates of East Asian societies, sapping societies’ vigor. You don’t really see a middle-income trap for East Asia, the problem is that once the middle-income trap is passed, East Asian societies fall into this “low-birth trap”.
The author gave several suggestions for China to catch up on the gap: 1) grow high-tech industries 2) encourage people to reverse-migrate from tier-1 to lower-tier cities 3) develop low-density and single-family housing in lower-tier cities 4) big subsidies for childbirth.
"Final moments" of China's internet and real estate industry's glory days
The internet and real estate are China’s two major economic paradigms of the past 20 years, and they have almost simultaneously encountered their final moments.
The article "Farewell, Huaqing Jiayuan" by 远川研究所, a Chinese independent media outlet focusing on finance, tells the story of how Huaqing Jiayuan, a residential community in Beijing's Haidian district, witnessed the intertwining of the internet and real estate sectors, transforming China's economy.
Huaqing Jiayuan is a residential community in Beijing's Haidian district, covering 190 acres and comprising 23 residential buildings, 97 units, 1776 parking spaces, and 2475 apartments. It offers a range of apartment sizes, from 37 square meters to 177 square meters.
Many notable figures in the Chinese internet industry, including Wang Xing, the founder of Renren (China’s Facebook) and later founder of Meituan, and Wu Shichun, the founder of Kuxun, once rented offices or lived in Huaqing Jiayuan. This established the community as a symbolic hub for internet entrepreneurs.
The growth of internet companies in China, such as Baidu, Alibaba, Tencent, ByteDance, and others, created numerous billionaires and millionaires. These tech elites often invested their wealth in high-end real estate.
A real estate agent familiar with current affairs told me that ByteDance, Kuaishou, and Tencent employees prefer large apartments of around 200 square meters. They tend to buy before the end-of-year bonus. Baidu and NetEase employees mostly purchase two or three-bedroom units, but they tend to pay in full. The smaller units are mostly bought by Sina and Xiaomi employees. It seems that Sohu employees are not seen very often.
The expensive Haidian school district housing becomes sought-after by employees, and internet “capitalists” [Baiguan: founders, entrepreneurs, owners, investors etc.] clearly have higher pursuits. In Shanghai, successful founders like to collect a set of Cuihu Tiandi; in Shenzhen, the adjacent Shenzhen Bay No.1 has become the standard for Nanshan's new rich; in Beijing, Huaqing Jiayuan is only an entry-level product, and the villa area in Shunyi, where new money is concentrated, is the next stop after the Nasdaq bell rings.
US dollar funds and VC/PE investors played pivotal roles in this ecosystem.
Moving the green paper (US dollar) from one side of the ocean to the other, the direct financing of Internet companies is essentially a large pipeline that has been in continuous operation for 20 years. One end is the world's largest currency reservoir, and the other is the heavily guarded financial market in mainland China, which has accumulated a total of $300 billion over the past 20 years.
This is the real big money.
The Internet economy has been pivotal for China in the past 20 years, generating wealth, boosting efficiency, and creating millions of jobs. However, signs of stagnation are emerging. By mid-2021, China's internet penetration neared its peak, and the industry's innovative models were dwindling. Giants have explored nearly all fields, leaving little room for further innovation.
Will Zhangjiang's Zhongxin Garden [Baiguan: Zhongxin Garden is developed by semiconductor firm SMIC] be the one to take over from Huaqing Jiayuan? This question is as uncertain as "Will hard technology take over from the internet?" Using a building to represent an industry actually contains a metaphor: the internet and real estate were the two major economic paradigms of the past 20 years, and they have almost simultaneously encountered their final moments.
Time goes by, time goes on, and those who are immersed in the old times need to turn the page.
Ting Lu: Is the "balance sheet recession" theory applicable to China’s economy?
In mid-July of this year, Richard Koo, the chief economist of Nomura Research Institute (NRI), mentioned at a forum that if China's real estate bubble bursts, China may face the risk of a Japan-style "balance sheet recession".
Ting Lu, the chief China economist at Nomura Securities, expressed his opinions on why the "balance sheet recession" theory does not completely apply to China's economy. He explained three key differences between China's current economic status and Japan's economy in the 90s:
The first difference is the extent of asset damage. Japan suffered from huge declines in both the stock and land markets in the 1990s. While China's stock index has been relatively stable over the past two years and the decline in China's housing prices is still far from as severe as in Japan in the 1990s.
The second difference is the type and region of the damaged assets. In Japan, the real estate bubble was mainly concentrated in six major cities such as Tokyo and Osaka, where land prices fell far more than in small cities. In terms of real estate types, the commercial bubble was the largest, followed by the industrial and residential bubbles. China's situation is just the opposite because from 2015 to 2018, large-scale monetization and renovation of shantytowns were carried out in low-tier cities, and the real estate bubble in China is mainly in the low-tier cities' residential real estate, where the land and housing prices have fallen far more than in first and second-tier cities. China's industrial land is generally used by local governments to attract investment at low prices, so the price fluctuations are extremely small.
The third difference is the willingness and ability of asset-damaged parties to repay debts. In the late 1980s, many Japanese companies were involved in the stock and real estate bubbles. In terms of real estate, the company's investment was mainly in commercial and industrial real estate, so asset damage was severe during the real estate bubble. Although these companies' assets were damaged, their products were quite competitive internationally. In the 1990s and early 21st century, it was an era of globalization, and Japanese companies benefited greatly from this process, had higher profitability, and therefore had strong debt repayment ability to repair their balance sheets. In China today, the bursting of the real estate bubble has the greatest impact on three types of institutions and people. First, developers, especially private developers who have expanded greatly in low-tier cities over the past decade. Second, local governments and their financing platforms, whose land acquisition prices have fallen and liquidity has plummeted. Third, residents who own property, especially families who bought low-tier city properties at high points. In addition, Chinese companies have not participated deeply in real estate speculation, and the prices of industrial land they lease are stable, so there is no serious damage to the balance sheets due to the shrinking real estate market. For local governments and their platforms with damaged assets, there is no strong willingness to repay debts due to the soft budget constraint, and there is basically no repayment ability. For many struggling private real estate companies and even some state-owned real estate companies, the current issue is the scale of defaults, not reducing debt. As for residents, there has indeed been a situation of early repayment of loans over the past year, but this is mainly due to the fact that the interest rate of existing mortgage loans is much higher than the market loan rate, and the purpose is to save money rather than repair their balance sheets.
At the moment when ultimate questions come to the surface, what can people rely on? ——A Buddhist scholar, Cheng Qing, reflects on the role of Buddhist studies in contemporary life
Buddhist scholar Qing Cheng has recently captured significant attention and traction online. His rising popularity reflects the evolving social climate, prompting us to share his perspectives. In an interview with LatePost, Qing Cheng explores the role of Buddhist studies in contemporary life, identifying a growing thirst for values and spiritual solace in modern Chinese society.
Discover some highlights of Cheng's viewpoints and how they relate to the changes in China's evolving social climate.
On psychological needs in the changing society
Cheng: There is a great demand in current society for the pursuit of values and spiritual healing. In the past 40 years, everyone has been focused on a single set of values: study hard, work hard, and make money to live a middle-class life, without thinking about anything else. In recent years, people have found that the upward mobility path is not as smooth as before, and the cost of changing fields is particularly high.
I used to tell people to pay attention to their spiritual life and learn to look inward. When the economy was growing rapidly, people were not interested in this and saw it as nothing more than a way to relax. Now it has become a more explicit demand, and if this demand is not met, people may not be able to continue living.
On shifts in values
LatePost: Where have you observed a shift in values happening?
Cheng: Many value choices are compelled by real-life situations. I've seen some individuals who were laid off from major internet companies take the time during unemployment to introspect and rebuild their life perspectives. This process is quite painful.
Industries cannot always be on the rise. From the internet to renewable energy, everything has its cycles. If your growth phase coincides with an economic upturn, it's easy to earn a professional income. But what if your growth cycle is out of sync with the era? That's where mindset becomes crucial.
LatePost: When the growth cycle is misaligned with the era, how can one seek a sense of value? Do you have any examples to refer to?
Cheng: Japan experienced a prolonged economic downturn, but it nurtured a large number of "artisans" who find satisfaction in their daily work, embodying what we call the "craftsmanship spirit". In the context of such macroeconomic cycles, they managed to find their purpose.
Society is at a moment of value shift. Material goals are no longer the top priority, and people might turn to things that bring them spiritual pleasure.
On Consumerism
LatePost: In the process of shifting values, some young people begin to seek comfort in Buddhist cultures, such as many people going to temples to seek bracelets and blessings for their "energy". What do you think of this phenomenon?
Cheng: They are not necessarily particularly interested in Buddhist studies, they just choose to settle their minds.
The important motivation for mystifying Buddhist studies is to understand that the paradigm of the world has changed. The value system that was predominantly centered on individuals in the past was very stable. Now you find that no matter how hard you try, you can't escape the larger constraints, so naturally you will wonder if there is another way to explain life.
LatePost: Everyone wants to be seen, but at the same time, they may feel humble. They may use consumption more to satisfy and comfort themselves.
Cheng: Everyone has an impulse to prove the value of their existence by doing something, such as making money or becoming famous. Even if they haven't made much money, they can prove the value of their existence. Consumption is a way to do that.
Nowadays, young people will say, "As long as I'm happy." On the surface, this is a statement of a person with strong autonomy and decision-making abilities. However, often when expressing themselves in this way, they are already enveloped in the logic of consumerism which they cannot clearly see.
For example, some young people, in order to highlight their taste and differentiate themselves from other groups, have to accept a lot of information. People are led by limitless consumption and the information behind it. A person's mind has to deal with so many things, and they have to find happiness among these fragments. People can easily become exhausted, even depressed.
In the past, the cage of consumerism was more rudimentary, but now consumerism is becoming more and more trivial and intricate, with more complex patterns and sometimes exquisite packaging, making it more difficult for us to reflect on it when we are in it.
On education and struggles of the young
Cheng: Consumerism has been internalized in our daily lives and education. For instance, the push to attend a good university and secure a good job is underpinned by a logic that treats oneself as a commodity. Recently, Zhang Xuefeng [Baiguan: an internet opinion leader in the education industry] suggested that wealthy families can choose any major without worries, but average families should focus on specific fields that guarantee job opportunities in the future.
I don't oppose this perspective, but if it becomes a mainstream societal value, implying that free exploration is a privilege reserved for the wealthy, it's deeply concerning.
Late Point: Young individuals and their families who make such educational choices are trying to find certainty in an era filled with uncertainties.
Cheng: That's true, but life is always filled with risks. This risk-averse mindset is now leaning towards a rigid way of thinking. I'm worried that the younger generation is becoming too set in their ways too soon, leading to a diminishing sense of life's richness.
Many university graduates now view their entire education journey as merely a means to secure a job. The issue is, when society cannot meet their job expectations, they feel a profound sense of life's emptiness. This pervasive feeling of meaninglessness can't always be resolved just by having a stable job, especially if during their college years they never reflected on life's purpose or had chances to explore on their own.
If people solidify their thinking from such a young age, failing to challenge or reflect on the existing reality, and don't think about making changes, society will become stifling.
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Thank you for posting some very useful data. As Ting Lu notes, the Japan bubble economy bursting was a parallel bursting of the stock market bubble and property bubble. Judging from a chart of the Shanghai Composite index, the stock market bubble in China burst about the time of Lehman Brothers collapsing and with some ups and downs, remains at an composite PE a fraction of the level of 2008 peak.