Last week, we looked at the two roads China would choose between, and this and the following column would seek to explore both in some greater detail.
Xi very recently greenlit the establishment of supply and distribution cooperatives and state canteens, as per CCP documents. These were the hallmark of Mao’s Great Leap Forward – the ill-fated second five-year plan which spelled famine and death for millions, as the state aggrandized itself in the economic sphere to complete and unstoppable paramountcy.
In an attempt for the “Great Leap Forward” to the next step on the road to communism, radical but detrimental reforms were implemented, which plunged the Chinese society into crisis and led to the (temporary) descent of Mao from absolute control.
Xi may have very well etched a similar tale into history for himself to prolong his control, by preparing for the second iteration of the Great Leap Forward.
The strategy for the supply and distribution cooperatives – Maoist speak for state-run supermarkets/stores – seems to be straightforward. Utilise the unfair advantages available to state-run enterprises to outcompete private markets, and specifically capitalise on the zero COVID-related disruptions. Chatter on Chinese social media regarding pilots for supply and distribution cooperatives indicates the same.
A similar strategy seems to exist for the state canteens, though the rhetoric for it by the CCP still seems to be mellow, perhaps due to their taboo nature given their association with Maoist economics. The state canteens may operate by crowding out the agricultural supply to urban centres and thus take control a large portion of the primary sector in this way. This seems to be complemented with increasing CCP focus on the agricultural supply, with “rural revitalisation” serving to bridge the rural/urban divide and modernise Chinese agriculture in the process.
In fact, steps in this direction are not particularly recent in nature. Increasing control over the Chinese tech-giants and increasing intervention in the fragile real estate sector such as via the 3 red lines all signal a shift in this direction.
The pursual of a planned economy comes with significant consequences, however, which would be explored in the next column.