According to one published study, the livestock population in China almost tripled in the three decades between 1980 and 2010. Not only that, the primary use of all those animals changed drastically, too. Prior, the backwards agrarian economy of the hardcore Maoist’s day didn’t eat its ox and cattle, rather such beasts of burden were used for the manual power they could provide in addition to the compost component they expelled out their back end while they worked.

But as China industrialized via an intentional, timely capitalist detour, the widescale introduction of farm equipment along with synthetic fertilizers meant so much more (and different) livestock could be used for food. In other words, living standards had measurably appreciated. Adam Smith, not Friedrich Engels.

Even the Communists admit communism doesn’t create wealth nor advance society all that much. Or, it hadn’t ever been able to in the past.

The current Chinese gang, however, seems optimistic this will change; or, they want everyone to believe they are optimistic. Specifically, that Xi Jinping Thought and Socialism with Chinese Characteristics in the form of a quasi-top down market economy will end up creating the best of both worlds. Screw you Karl, these communists are going to try it anyway. This is what the curiously qualitatively ambitious 14th Five-Year Plan hints.

The full details aren’t yet known, only some key nuggets the Communists want released first in order to prepare the Chinese people.

Gone are the days when numerical targets drove both the narrative and China’s plans for where its economy would be preferred. Dual Circulation is now the top-level order. And not just for the next five years; no, the 14th is the first which will reportedly plan out much further into the future.

Xi Jinping’s autocracy is now thinking ahead to 2035. Why? When you get down to it, there’s just not much to like about 2020. Or maybe even 2025. To get where China wants to go, is planning to go, even they think it’ll be way farther down the road before the country could realistically get there.

Because there won’t be much economic growth in between. Quantity growth was yesterday.

Yesterday’s economy, however, had meant a very simple trade-off; China dollarizes (with eurodollars) and becomes advanced – to the point of being able to eat so much meat – with the proceeds. More of these dollars, more quantity for growth (and livestock counts). No more dollars, fewer of them, in fact, suddenly quality growth turns out to be the only item on the economic menu.

The term “high-quality growth” appears numerous times in press reports. But what does that really mean? According to the 14th plan outlines, “unheard of technology.” The “scientific and technological self-reliance” which underpins a “strong domestic market.”


One senior Chinese official told the Financial Times on Friday:

China is still lagging behind advanced economies in the mastery of key technologies and we are not going to catch up in the foreseeable future. We need to keep savings rates at a reasonable level so we can keep investing in R&D.

In the past quantity-growth regime this technology gap had meant what got Leon Trotsky in trouble with Josef Stalin; Trotsky’s Permanent Revolution which, among other dastardly things, justified (to the committed Communist) widespread theft of Western advances. Obviously, this didn’t work too well otherwise Lenin’s “transitory” Russian police state wouldn’t have ended in the early nineties necessitating Deng’s Southern Tour to make sure China’s Communists didn’t meet the same fate.

If you try to steal your way to prosperity, you can only ever “lead from behind” (as some politician once aimed). That’s fine when GDP grows in the high teens from behind export-oriented industry increasing at rates in the high twenties. When all that just goes away, and then never comes back despite being promised year after year after year, “stimulus” after “stimulus” after “stimulus”, quality growth by default.

What else is there?

And if China can’t depend upon global growth – and China has figured out the country can’t because it’s always synchronized and therefore globally synchronized terrible – then (dual circulation) that only leaves the Communists the one option: China’s economy will now try to go it alone even though it begins this new path light years behind everyone else. As China Daily put it:

For the 14th Five-Year Plan period, China will speed up fostering a new development pattern where domestic and foreign markets can boost each other, with the domestic market as the mainstay, according to a communique released after the session.

Sure, if the world ever gets its act together, fine, the Chinese will welcome that external boost. They are explicitly not counting on it. Instead, China’s going to develop new innovations and technologies all its own to leap ahead of everyone else.

Some might say preparing China for a huge leap forward (uh oh).

What are these “unheard of” technologies? The term answers the question. China is literally planning to just make it up as they go. No wonder they’re now allocating 15 instead of the usual five years. Maybe, possibly, the Communists might need a bigger margin for error; and to hold off accountability for any errors so far beyond the visible time horizon they’re pretty much freed from any accountability today at all.

A too-small margin for error explains the 19th Party Congress pretty well. Thanks for nothing, Bernanke/Yellen.

The real problem here is that having grown into a relatively wealthy society which now eats more of its livestock than harvests all the manure coming out of it, is that there probably aren’t enough farm implements left available to shovel all the bull-dung that we know is being written into China’s 1st Fifteen-year Xi Jinping-athon. Just the first hints from the plan and it’s already pretty thick and deep.

This is what you get when Alan Greenspan’s disciples run around pretending to be running things for the global economy via its reserve currency system. Worse, we all have to root for the quasi-Communists to accomplish something communism has never been meant to accomplish, otherwise the alternative (when quality can’t make up for quantity because quality is “unheard of”) is even less pleasant – a possibility that China’s current Emperor knows very well.

By the way, some China PMI’s (below) for October over the weekend. Most commentary extolled their excellence. Xi’s not waiting around for China to figure out they really aren’t anything close to excellent. Seriously, ridiculous and absurd promises pushed way out to 2035 don’t indicate a whole lot of trust and confidence about 2020. Or 2025.

This isn’t just about China, rather the Chinese trying to deal with the fact this remains the eurodollar’s world. When the eurodollar system went up, the world seemed to come together in prosperity (globalization). Now that the eurodollar goes only down (just not all at once), the world seems to only come apart.

Despise the man, Xi Jinping, and what he represents, but, dammit, listen to him!