Au Loong-Yu is a long-time Hong Kong labour rights and political activist who now lives in exile. In the second part of this interview with Green Left’s Federico Fuentes, he discusses China’s economic woes and the significance of the White Paper movement.
The first part deals with China’s rise and tensions with the United States. An earlier interview looked at China’s position in the world and implications for peace and solidarity activism.
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What does the bursting of China’s property bubble and its ongoing debt crisis tell us about the state of the Chinese economy?
If you look at China’s debt-to-GDP ratio, which refers to total debt including all government and private household debt, you will see it was about 87% in the early 1990s but rose to 211% in 2010 — a rise of more than 100% in 20 years. Figures from late 2023 now put it at closer to 300%. What this tells us is that China’s high investment rate has been partially funded by a sea of debt.
The property market is a typical example. In my opinion, the bursting of this property market bubble marks a turning point in China’s rise. The reason for this is that the three factors that have contributed to China’s rise — high investment rate, colonial legacy and its party-state — have now all exhausted their potential.
Take China’s colonial legacy: President Xi Jinping’s annihilation of Hong Kong’s autonomy has deprived China of a vibrant financial centre, which it badly needs amid the economic downturn.
The same is true for China’s high investment rate, which was only possible at the expense of household consumption. China’s household consumption level has declined dramatically since the early 1990s. The result is that China faces never-ending overproduction and overcapacity, but a relatively narrowing domestic market.
That is one reason why China became a leading merchandise exporter and, since the turn of the century, has become a leading capital exporter. But this cannot go on forever for the simple fact that a new trade war is looming.
When the first trade war started in 2016, China maintained it was not scared. One state official went as far as saying Chinese people were ready to eat grass for a whole year if needed, as an indication of how much pain Chinese people were willing to endure.
This brings us to the third factor, the party-state, which has been the main actor forging together the two other factors to bring about China’s break-neck paced modernisation.
The party-state’s two inner logics — boundless greed for corruption and boundless appetite for perfecting state coercion — have created a monster in which the two logics feed into each other.
The more “perfect” the state coercion, the more the bureaucracy is free from any accountability for its actions. This creates more incentives to get rich through corruption, which in turn requires more state coercion to protect the bureaucracy. But everything has a limit.
The bursting of the property market illustrates the limits of the first logic. Given urban land is state-owned and managed by local governments, this was a market that was dominated from the start by local governments, their “financial vehicles” (LGFV), and crony bankers and developers.
They were responsible for the piling up of billions of dollars of debt. They created a mega bubble in which so many new flats have been built since 2009 that they alone could house 250 million residents while the current housing vacancy rate stands at 25%.
On the other hand, the emergence of the White Paper movement in response to the government’s zero-COVID policy is an example of the limits of the second logic.
The regime’s zero-COVID policy was never a regular “lockdown” to prevent the spreading of the virus. It was what I called a “lockup”, because for three years, people were locked up in their communities or homes over just a single case of COVID-19, with no regard for whether they had the food or medications they needed.
And what for? For the naïve idea that zero COVID was achievable. What this policy did, however, was give the regime a golden opportunity to further perfect its control over people.
The inconvenient truth for the regime, however, is that there is a limit to how much pain Chinese people are willing to endure, as we saw with the White Paper movement.
Could you tell us a bit about the significance of the White Paper movement?
The White Paper movement began as a direct response to the zero-COVID lockup but became a historically significant moment because the movement achieved a victory and, to a certain extent, the regime suffered a defeat.
The Urumqi residential block fire on November 24 kicked off a wave of protests in more than 20 cities against the Chinese Communist Party’s (CCP) zero-COVID lockdown policy. Protesters’ anger was largely driven by the fact that the 10 deaths in the fire were the direct result of the regime’s lockup policy. These protests [in part] forced the government to back down from its zero-COVID policy.
This victory was important because Chinese people have been oppressed to the point that they have essentially been denied their right to self-esteem. Many have taken to referring to themselves, in a self-mocking way, as “garlic chives” (jiucai, 韭菜), by which they mean vegetables that are endlessly harvested by the CCP regime. Others use the term “huminerals” (renkuang人礦), or human minerals, which are mined by the CCP.
Though we cannot say that the White Paper movement represents a complete shift in people’s mentality from accepting the status quo to brave resistance, it has awakened young people. It not only prompted common citizens and workers to protest against lockup, but resulted in them winning their own freedom — even if only temporarily. This was eye opening for many, in particular the youth.
One of the horrible legacies of the post-1989 repression was depoliticisation. We had 30 years in which young people did not dare to talk about politics. But with the White Paper movement, young students took the lead in protests and became more outspoken and sharper in their attacks on the regime.
They started to meet on the internet and at protests and began saying: “We should repent for the fact that we stayed silent during the Hong Kong uprising and repression, and during the repression against the Uyghur peoples. We should not allow the government to divide and rule over us.” This is very significant.
Of course, we need to be cautious about the extent of this reawakening — it is very uneven and, as a matter of fact, the movement has died down since the end of the zero-COVID policy. That is not surprising given the severity of repression and the unpreparedness of these young people.
But the fact that discussions have taken place on social media channels among overseas Chinese students and thousands of mainland Chinese, exchanging all these political ideas and opinions, is significant progress compared to the past 30 years of depoliticisation.
How does all this fit into the question of China’s rise? Well, what we are seeing is that China’s rapid modernisation and industrialisation has also transformed Chinese class structures and cultures.
Today workers, partly due to their concentration in cities and partly through their own spontaneous struggles — together with the conscious work of labour NGOs in the previous stage — are no longer easily fooled by their employers.
As for the urban middle class, while there was hope this class would lead the democratic movement, this never materialised. But they have gradually adopted very rudimentary ideas of accountability, of human rights, and so on.
While the CCP’s modernisation project has not yet brought about the forces that could undermine the regime in a fundamental way, it has created increasing impatience with the party itself. It is now becoming increasingly difficult for the CCP to continue with its extreme modernisation project.
Even if Chinese people have not yet won any democratic rights, the White Paper movement has shown that their mindset is changing and their political awareness is rising — very slowly, from a very low starting point and in a very unbalanced manner, but nevertheless progressing.
Of course, no one can say what will happen next. We should not try to project some kind of linear progress when talking about China’s future. The CCP is acutely aware of what is happening and is thinking of ways to revert the situation.
One card they may play is diverting people’s attention away from domestic issues towards external enemies — half real and half imagined. That is why the Chinese government has been increasingly adopting a war-like stance in its diplomacy.
It is difficult to guess what the regime will do next. Nevertheless, we are clearly entering a new period.
[Extracted from a much longer interview first published at links.org.au.]