China's cabinet has pledged stronger policy support to meet the country's growth target, a move designed to stabilize capital accumulation amidst slowing industrial profits. This intervention comes as the state seeks to manage economic contradictions without addressing the fundamental issues of wealth distribution.
State Bolsters Capital
The cabinet's plan includes expanding relending facilities, directing state resources towards specific sectors of capital. These facilities will target technology innovation, industrial upgrading, agriculture, and small firms. Such measures represent direct state aid, ensuring continued avenues for profit for these enterprises. The government's focus remains on achieving its overall growth target, a metric that primarily reflects the health of capital rather than the well-being of the working class.
Further studies are underway for new measures to support the housing market, employment, and income growth. These proposals aim to alleviate symptoms of systemic imbalance, rather than challenging the structures that create them. Support for the housing market often translates into safeguarding property values, benefiting landlords and developers while the struggle for affordable housing persists for many. Discussions around employment and income growth are framed within the existing economic order, where wages are often suppressed to maximize corporate profits.
Contradictions Persist
Despite these pledges, China's industrial profit growth slowed further in August. This slowdown indicates underlying pressures on capital, even as the state mobilizes resources to prop up the system. While overall profits saw a dip, strength was noted in technology manufacturing, particularly amid the AI boom. This highlights a selective process of capital accumulation, where some sectors thrive through new forms of surplus extraction, while others face stagnation.
The persistent weakness in domestic demand remains a critical indicator of the system's inherent contradictions. Workers' ability to consume is directly tied to their wages and economic security. When demand falters, it reveals a fundamental imbalance: capital extracts more than it returns to the labor force, leading to a bottleneck in the circulation of goods. The state's current policy support prioritizes the conditions for capital to continue operating, rather than empowering the working class to drive demand through increased purchasing power. These measures manage the crisis for capital, but they don't resolve the underlying tension between profit accumulation and the needs of the many, leaving the working class to bear the brunt of economic instability.