The assertion that “without a well-functioning economy, political stability cannot be achieved” may sound all too cliché, yet it is certainly true. In the context of China, many of the nation’s challenges are deeply rooted in economic issues.
China’s central government has indeed placed substantial emphasis on tackling such challenges. As outlined in the Third Plenary Session, a series of policy measures have been introduced. However, these initiatives have faced various disruptions and challenges, leading to significant obstacles in their execution. This has created a problematic cycle of policy deviations, indicating the absence of a comprehensive, top-down strategic vision capable of steering the country toward systemic change. The lack of a steady, clear, and objective overarching idea that could provide direction remains a critical gap.
As the economic downturn continues for an extended period, societal tensions are gradually escalating. Current policy measures primarily focus on maintaining social stability. For example, certain regions have introduced investigations targeting individuals categorized under the “four lacks and five frustrations” criteria. The “four lacks” refer to individuals who are without a spouse, children, stable employment or income, and property or assets. The “five frustrations” describe those who have experienced failed investments, personal setbacks, relationship breakdowns, psychological imbalances, and mental disorders. Alarmingly, the number of people fitting these criteria is estimated to be as high as 50 million. Relying solely on traditional “stability maintenance” methods in the face of prolonged economic decline may prove inadequate, leading to unsustainable fiscal burdens that the government is ill-equipped to bear.
Thus, the current approach of distributing money and maintaining stability in isolation appears increasingly untenable. This represents a form of policy drift, oscillating between extremes without addressing the core issues effectively.
Reform is thought to be a potential solution, yet it is inherently a time-consuming process. The design, formulation, and implementation of reforms, even when well-structured, require significant time before tangible results are realized. Given China’s extended economic stagnation, the question arises whether there is sufficient time to allow for such delays.
Given these challenges, what is the optimal course of action? There are two key factors to consider. First, comprehensiveness is crucial, so as to provide the macro-level vision and coordinated planning needed to achieve reform objectives. Second, central leadership must offer a clear, top-down “overarching idea” to drive policy momentum and generate macro-level outcomes. This overarching idea must be grounded in a form of “comprehensive welfarism” that should include:
- Universal healthcare access: A complete overhaul of public healthcare, eliminating the increasingly unsustainable medical insurance system and implementing universal free healthcare. Simultaneously, high-end private healthcare services would be encouraged and taxed to support public healthcare.
- National pension security: Strengthening pension systems and promoting elderly care through urban renewal projects aimed at improving real estate, alongside accelerating pension insurance.
- Streamlining government departments: Reducing government bureaucracy to improve efficiency and reallocate savings toward increasing social welfare provision.
- Welfare supply and consumption vouchers: Simultaneously distributing welfare subsidies and consumption vouchers to stimulate both economic growth and consumption.
- Labor law reforms: Strengthening labor laws to support Chinese enterprises, encouraging work, and cultivating a culture that values labor while avoiding the risks of dependency that can arise from the welfare models of some countries in the West.
- Rationalizing government projects: Halting or postponing large government projects that do not align with consumer demand, and managing foreign aid prudently.
- Criminal law amendments: Aligning criminal laws with those that protect private property and punish violations that undermine private enterprise.
The benefits of “comprehensive welfarism” are clear. First, it serves as a powerful tool for regulating the socio-economic landscape, using welfare benefits as a lever to encourage desired behaviors while penalizing negative ones. Second, it fosters economic growth through consumption, especially as China transitions to a more consumer-driven economy. Third, it strengthens the domestic market, enhancing China’s global position by increasing domestic demand.
All in all, such a form of welfarism represents a preliminary policy concept that offers a practical application of theoretical ideas aimed at addressing China’s current economic and social challenges. By offering a top-down, integrated solution, it has the potential to create the momentum necessary to overcome the country’s economic stagnation and provide a clear path forward for its socio-economic future.
