I'm Ruby Jones and you're listening to seven AM. After decades of spectacular growth built on property and heavy industry, China has tried to chart a new path, one driven by electric vehicles, green technology and AI. But as those bets begin to falter, there are questions about whether China has reached its peak, with stubborn problems like high youth
unemployment and an aging population seemingly intractable. So as the new year begins, what is Shei Jinpin's plan to course correct and if he can't pull it off, what does that mean for Australia Today. Essayist, translator and author of eleven books on China, Linda Javin and What's next for one of the world's great superpowers. It's Thursday, January one, Linda. Right now China is facing a whole raft of challenges, economic, diplomatic.
But I want to start with the electric vehicle industry because it seems to tell us something about the way the Chinese Communist Party goes all in on certain industries. So can you tell me about that?
So it will set goals. So about ten years ago it said we have to develop electric vehicles.
Thanks the heavy government subsidies. The former nation of bicycles has become the world's leader in electric vehicles. Whether you're buying the car or building the car, providing the electricity, or assembling the battery, everyone in China is entitled to government money and assistance.
You know. And five years ago China had five hundred electric vehicle manufacturers. So five hundred manufacturers, that's unsustainable. They began to compete. There were many, many, too many electric vehicles made. But the overcapacity is such that there's just incredible amounts of unsold vehicles, and price deflation has been a problem for the manufacturers because there's so much availability, there's so much supply. Over supply as a result of
government policy is a continuous problem. It happened in the steel industry, which is one of the reasons they started Belton Road to use excess steel capacity. But when you have private enterprise with over capacity, it's not as easy to fix.
So you've got this key industry with a lot of problems. But can we talk about the economy from the perspective of workers. What is the reality of the job market in China right now?
Well, the majority of wealth, generationally speaking, is held by older generations in China with very frugal habits. They were brought up in a different age, you know, when I'm talking about people who are in their sixties or or older, and they tend to save or invest in something like real estate, which is a whole nother problem. And young people, a lot of them don't see a clear future ahead,
including college graduates, university graduates. They are now being encouraged to take up jobs that they shouldn't look down on, jobs in the rural sector and all that kind of thing.
China's jobless rate for sixteen to twenty four year olds hit twenty one point three percent in June. That's nearly four times the national rate. Beijing officials suspended the publication of the July number, coinciding with a graduation season. With an estimator.
There was a woman and a couple of years ago, she went viral on social media because she put in something like eight hundred applications for jobs, and she'd had thirty interviews and she still couldn't get a job, and she had a good degree. And this prompted a lot of young people to start talking about a character in an early twentieth century novel called Koid Koid was this character who still wore his scholar robes in the early
twentieth century, like an old fashioned scholar. And he was a young guy and he could never quite get a job. He could never quite pass these civil service examinations to get the job. But he had all of the pretensions of, you know, the educated class, and he would sit in the tavern and he would quote Confucius and young people began ironically liking themselves to Kongig, and the government didn't
like that at all. So at that point there was this person who wrote something like sunny Happy Kongig, kind of responding to the government's call for positive energy. But it is difficult being young, having not great prospects and not really being able to afford a place, or as with another viral couple on social media, they bought a place in one of these new developments by Evergrand or something, and the company went bankrupt and they've lost their life savings, their nest egg. It's difficult.
Yeah, And so I mean, obviously the CCP is highly aware of how the economy is impacting people. Tell me about what they're doing to try and turn it around.
So the government is constantly examining the options and responding to situations, not always quickly enough, but that's true of most governments. So, for example, the thing with ev is just to go back to that simple example that was promoted in previous five year plans. But the five year plan that's going to be announced and approved in March doesn't include evs, and it puts a stronger emphasis on AI and green technology and all of that kind of thing. So it tries to rebalance as best as it can.
That's one of the ways that the government does is they put down certain goals and one of them, for example, was elimination of poverty by twenty twenty. Of course, they had to announce that they had achieved that goal, and I have no doubt that they will announce at a certain point that they have achieved peak carbon and net zero when those times come up. It's very important. It's the way the Communist Party has always worked. So how
does that work in practice? It means that at the grassroots level, where they actually know what's going on, is their poverty is there not if they report up, oh we have it actually eliminated poverty, there's still a lot of people living very very abject circumstances. That doesn't look good for the local officials. There's a lot of incentive to lie, and again a very complex situation. The Chinese Communist Party and government have acknowledged that this is an
inbuilt problem of the system. They need good information, you know, bad data in, bad data out, and they know that. But the way the system works, by the time the information gets to the top, it's what the government wants to hear. It is what sheetin Ping wants to hear.
Coming up Chi Jinping's plan to turn the economy around, and so talk to me about the roadmap we're on right now. Then what's being set out? What are the goals that you know, she's expecting to be met.
Okay, So one of the big things that they're talking about in terms of a transition in the economy is to a people's centered economy. The Communist Party loves expressions like this, but what does that actually mean. It means that they want to invest more in things like education and health and a service economy and that kind of thing. So they have these ideas about where it should be going. You have less people living in rural areas. That's been
a long term demographic shift. So what's happening is people are leaving the rural areas, and yet so much of the infrastructure and the planning has to do with connecting those places. So they're spending a lot on roads to villages. Now does that make sense? So they're looking at problems like that, you know, how do you rebalance your investment. They want to tame over capacity in things like steel by shutting down outdated and inefficient plant, transitioning to green
steel and obviously green technologies in general. They want greater technological and scientific self reliance. That's a huge goal and it has been for some time. They're also very much looking ahead, looking to invest in the security, the architecture of national security.
Yeah, tell me a little more about that.
Well, that's all areas of security. So on the one hand, it's building up a defense capacity and on the other it's also looking after things like cyber security and everything else, which I think a lot of people will find a bit ironic considering some of the things that the Chinese Communist Party and government have been accused of with regard
to other countries. But the security includes surveillance and policing, energy security obviously, all these things get slowly added into this big picture of what it means for national security. And I don't think China in that sense is that different from other places. You know, we've all had to expand our thinking on the idea of national security.
Yeah, And so when you look at g and his leadership, I mean, I'm not suggesting it's under threaten anyway, but I suppose what are your thoughts on what is at stake here for him?
Because everything, Yeah.
I mean, if the economy can't be turned around, what happens for she?
So essentially it's not just she, it's the Communist Party's own legitimate if you think about it, the Communist Party came to power, its legitimacy was that it helped to defeat the Japanese, or they say it defeated the Japanese. It fought the Japanese invasion, it won the revolution against a corrupt, self serving government, and it was the legitimate MAO is like the legitimate savior of the nation in that sense. So that was where it staked its legitimacy.
Then over time it obviously made some big mistakes and the Great Famine of nineteen fifty eight to sixty one in which conservatively thirty forty million people died. You know, that's a generally agreed number that was man made, that was caused by policy. So China then has to in the post mail period figure out a new formula for legitimacy, and that new formula is we are making people's lives better. They are the people who have given China the chance
to get rich. People's lives have gotten better, China has become stronger and more respected internationally. That is what it stakes its legitimacy on. Now, if people's lives aren't getting better, if the economy tanks, then that part of the legitimacy equation starts to fall apart.
Okay, and China is obviously Australia's biggest trading partner. So how do you think the government here should be looking at what's happening in China right now and thinking about it.
I think we have under capacity in China watching a long term thing before I speak of the short term. I think we really need to invest more in our universities, in our humanities departments. You can't understand China unless you understand Chinese history. You have to have language. You know, we have to build up that capacity because China is such a complex place. It's a puzzle with lots of parts, and if we can't look at it, if we don't have enough people with eyes on it, you know, and
really understanding it, then we're in trouble. But in the short term, I think we always have to be aware, of course, of the tensions and monitor things like with Japan. Right now, it's so angry with Japan that Japanese pop star concerts have all been canceled. There's a lot of things like that, you know. And we've seen Australians arrested and used as pawns. Basically, we've seen that with Canadians, and so we have to be always aware of what's going on with China and the rest of the world.
But in terms of actual new opportunities, say we invest over thirty percent, significantly over thirty I think like thirty six percent of our foreign investment I think goes to America, something like one point three percent of our foreign investment
goes to China. There are huge risks. Obviously I'm not underplaying the risks, but it seems to me that when they say they want to open up the economy Further, they want to open up to foreign in value added telecommunication, biotechnology and also the possibility of wholly foreign owned hospitals. I think perhaps there is room for Australian business to
move in to those areas in China. I think we can take a little bit more creative advantage of what China can possibly offer us as market and investment than we have in the past. You know, just dig up Australia, sell the rocks.
Well, thank you so much for your time.
Thank you, Ruby, it's been a pleasure. Thanks for listening.
Tomorrow on the show, we're taking an in depth book at how Donald Trump has actually changed America beyond the wild rhetoric and attention grabbing announcements. What are the ways he's reshaped the country and its place in the world, and from immigration to healthcare and the economy, which changes will last. That's seven am tomorrow with doctor Emma shortis US politics expert at the Australian Institute. I'm Ruby Jones. This is seven am. Happy New Year.