China's cabinet moved this week to expand state-backed lending for technology and industrial capital, a direct intervention to prop up profits even as the nation's working class struggles with persistently weak domestic demand. The government pledged stronger policy support to meet its growth target, prioritizing the accumulation of capital over the purchasing power of the masses. This move comes as industrial profit growth slowed further in August, signaling an uneven recovery that benefits specific sectors of capital while broader economic pressures mount.
The cabinet's announced measures include expanding relending facilities. These facilities are earmarked for technology innovation, industrial upgrading, agriculture, and small firms. Such state-directed capital flows aim to stimulate production and maintain profit margins for owners of these enterprises. They represent a direct subsidy to capital, channeling public resources into private hands under the guise of national growth.
State Intervention for Capital
The stated reason for this intensified state intervention is the economy's pressure from weak domestic demand. This pressure is a direct consequence of wage suppression and the systematic underpayment of labor, which limits the purchasing power of the working class. While capital seeks new avenues for expansion, the foundational issue of workers' inability to consume the goods they produce remains unaddressed.
Industrial profit growth, a key indicator of capital's health, slowed in August. This slowdown highlights the inherent contradictions within the system, where overproduction or insufficient demand can threaten profitability. Despite this overall deceleration, technology manufacturing did see gains, buoyed by the global AI boom. These specific gains for tech capital, however, weren't enough to offset the broader weakness in domestic demand across other sectors.
The Cost of Uneven Growth
The unevenness of this recovery is stark. Certain segments of capital, particularly those benefiting from stronger technology spending, continue to extract surplus value. Meanwhile, the vast majority of the population experiences soft demand, reflecting stagnant wages and precarious employment. The state's response is to inject more capital into the system, rather than addressing the structural issues that lead to wealth concentration and a lack of broad-based prosperity.
Managing Contradictions
In addition to direct capital support, the cabinet is considering new measures to support housing, employment, and income growth. These proposals are presented as solutions to the symptoms of economic inequality. They function as a means to manage the system's contradictions, offering symbolic concessions that prevent deeper structural challenges. Such reforms extend the life of the existing economic order without confronting its foundations: the systematic underpayment of labor and the privatization of collective resources. The state's primary function remains clear: to protect accumulated wealth and suppress organized challenges to the existing distribution of power.