Professor Xu Chenggang, a senior research fellow and economist at Stanford University, recently argued that the Chinese Communist Party (CCP) is incapable of fighting the trade war with the United States, as the core of China’s economic crisis lies in the CCP’s own systemic failures.
Xu noted that while the CCP claims it can counter U.S. tariffs by boosting domestic consumption, the reality is that consumer demand in China remains extremely weak. This is because hundreds of millions of Chinese citizens still live in poverty – a problem rooted in the CCP’s authoritarian governance.
One of the primary causes of this poverty, Xu explained, is China’s land ownership system. In rural areas, land is officially “collectively owned,” which in practice means it is controlled by the government. Farmers have no property rights and therefore cannot profit from the appreciation of land values – the CCP reaps those gains instead. When rural residents migrate to cities for work, they are denied basic welfare benefits. Even after settling in urban areas, they are treated as second-class citizens, lacking access to healthcare, pensions, and social security.
Additionally, nearly all banks in China are state-owned, and the government tightly controls access to credit. Private enterprises face significant hurdles securing financing, while their profits are often drained by state banks.
As a result, Xu emphasized, the majority of the Chinese population is not middle class but impoverished. According to a nationwide sampling survey, approximately 540 million people in China live on less than $5 per day – the international poverty threshold. “How can these people be expected to drive consumption?” he asked.
Xu also remarked that many economists outside China fail to grasp the true nature of the Communist Party system. “The Party does not prioritize the well-being of the people,” he said. “Its primary focus is on its military-industrial complex (essential for maintaining control over the country and people).” He argued that the CCP hoards national resources, exacerbating poverty and inequality, and therefore, its own system is causing the crisis in China.
Source: Epoch Times, May 1, 2025
https://www.epochtimes.com/gb/25/5/1/n14496259.htm