2011 December 03 Saturday
Conspicuous Consumption By China Elite Breeds Resentment

A Wall Street Journal article relates out "princeling" sons of the Chinese elite engage in conspicuous consumption such as driving a red Ferrari even as popular resentment rises and this conspicuous consumption and corruption undermines the legitimacy of the Chinese government.

The car, though, was a surprise. The driver's father, Bo Xilai, was in the midst of a controversial campaign to revive the spirit of Mao Zedong through mass renditions of old revolutionary anthems, known as "red singing." He had ordered students and officials to work stints on farms to reconnect with the countryside. His son, meanwhile, was driving a car worth hundreds of thousands of dollars and as red as the Chinese flag, in a country where the average household income last year was about $3,300.

The driver of the Ferrari, Bo Guagua, is the grandson of a guy who fought alongside Mao Zedong to bring the communists to power. If the top leadership of China wanted to reduce public resentment while still remaining corrupt it should force the "princelings" (sons of high government and military officials) to hide their consumption. Houses should look poor on the outside and well hidden. Families of government officials shouldn't be allowed to drive anything more conspicuous than a Buick. No BMWs. No Ferraris or Lamborghinis

How does the Chinese elite maintain their legitimacy? Can they maintain power in spite of unpopularity? China's economic growth is decelerating. Growth by running larger and larger trade surpluses is not a sustainable model. Much of the lower hanging fruit of industrialization has been picked and ROI on incremental capital investment has plummeted.

The international financial crisis threatens to undermine even the weaker rate of growth that China might otherwise be able to maintain.

"The current crisis, to some extent, is more serious and challenging than the international financial crisis following the fall of Lehman Brothers," he said.

China's manufacturing might even be contracting as the effects of Europe's financial crisis cut into demand for Chinese products.

If Chris Martenson is right about resource limitations then economic growth isn't going to be available as a way to generate rising incomes and largesse to buy off populations and factions.

Share |      By Randall Parker at 2011 December 03 07:44 PM  China Control Internal

WJ said at December 13, 2011 11:41 AM:

When I read about the lifestyles of the wealthy in places like Africa, China, India, Russia, and Hollywood the more I come to understand why communism and socialism were popular. Capitalists there seem inevitably corrupt and eager to show off. The system benefits when the elite are imbued with a heavy dose of humility, or at least propriety.

Randall Parker said at December 13, 2011 6:59 PM:


We desperately need an upper class that does not flash status symbols.

saim said at April 23, 2012 11:52 PM:

One point of accurate accent is the apprehension that 'Asian / Chinese' basic would be able to accounts development abroad or accommodated the needs for borrowing by heavily accountable governments elsewhere. because ĎAsian capitalí is not able to be provided on the base of the antithesis bedding of banking institutions, but rather requires cartoon aloft banknote flows generated by high-turnover assembly with bound attention to advantage and administration a top amount of civic savings. As the calm appeal deficits and all-embracing imbalances this action requires are accepting abutting to abolition all-around bread-and-butter growth, ĎAsian capitalí could cease to be accessible to anyone

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