The collapse in demand in the US, EU and other trade partners from the end of 2008 on threatened to lay waste China’s export sector.  With exporters a major driver of employment and growth the government stepped in with various supportive measures.  The CNY ceased its upward movement against the dollar, the banks stepped forward with financing to meet companies’ cash flow needs, and the Ministry of Finance reintroduced and then increased VAT rebates on exported goods.

Extra cash in difficult times has doubtless helped some of China’s exporters keep their heads above water.  But there are reasons to believe that neither a stable exchange rate nor VAT rebates have been much help.  The reason is that the problem for China’s exporters is not competitiveness (cheaper goods of a similar quality from Vietnam and elsewhere eating into their market share) but rather weak demand (consumers in the US and EU spending less money).

An article in the 21st Century Business Herald takes this analysis one step further and argues that the cost to the Chinese government of export VAT rebates might outweigh the benefits.  The author’s main argument is that the benefits of subsidising China’s exports depend on the elasticity of demand - that is - how much demand changes when prices change.  This is my translation of some of the main points.

‘The elasticity of demand for China’s exports is about 0.65.  That is to say that every time prices fall 1%, the quantity purchased will increase 0.65%. 

So far this year the government has spent CNY800bn on export VAT rebates.  Given the elasticity of demand for China’s exports, that means they have used CNY800bn in government spending to buy a CNY520bn increase in exports (CNY800bn*0.65 = CNY520bn). 

What is more, 50% of China’s exports are produced by foreign firms - that means half of the benefits of the CNY520bn is going to foreigners.

Of course, increasing exports is also good for the rest of the economy - creating employment and demand for raw materials.  Increasing exports has a multiplier effect on GDP which is estimated at 1.2.  So for every 1 unit increase in exports the contribution to GDP is actually 1.2.  Taking this into account, the impact of export VAT rebates on GDP is actually CNY624bn (CNY520bn * 1.2 = CNY624bn). 

Spending CNY800bn for a mere CNY624bn increase in GDP is clearly not a good use of the government’s money.  If the government had spent the CNY800bn directly in the domestic economy, the multiplier effect would have meant a CNY960bn addition to GDP - much more than you get by subsidizing exporters.

Some people might argue that subsidizing exporters is especially beneficial because of its impact on employment - protecting large numbers of jobs in the export industry.  In fact, this depends on the price elasticity of demand for goods in labour intensive export sectors.  In fact, demand for labour intensive export goods does not change much when the price changes, so even from the perspective of protecting jobs, export  VAT rebates are not a good idea…’

It’s actually a rather long article which makes a number of other points - you can see it here.

A couple of points I take away from this.  First, defining the national interest in trade is not easy.  Not only are there different interests between consumers (who tend to benefit more from free trade) and producers (who sometimes benefit in the short term from protectionism), but also between foreign and domestic firms.  China’s export subsidies might hurt firms in the US that have their market share eroded by cheaper Chinese goods, but they help US firms based in China who benefit from the subsidy. 

Second, the author argues in favour of directing stimulus efforts into the domestic economy rather than toward the export industry.  This would be consistent with rebalancing the economy toward domestic demand as a driver of growth and away from excessive reliance on foreign demand.  Unfortunately, as the budget-busting spending on export VAT rebates so far this year demonstrates, it is a message the government is not yet ready to hear.

Finally, it’s interesting how the language of nationalism creeps into what is actually a rather technical economic paper.  The author - who is from the Chinese Academy of Social Science - is not afraid to point to benefits to foreign firms in China of government subsidies as a negative aspect of policies.  Clearly China has benefited enormously from wealth creation by foreign firms, but there is also a popular strain of discontent with their role in the Chinese economy, ranging from a scandal about Japanese businessmen participating in an orgy with Chinese prostitutes, I think in Shenzhen, to the widespread belief that its is foreign factories that are the main source of pollution on the mainland.

Financial Crisis, Fiscal Policy, Labour markets, Trade

I was in a meeting not long ago with local officials in a county-level city in Chongqing municipality. Chongqing is moving fast – according to official numbers its economy has grown 14% this year, approximately twice the national average. There are natural reasons for this: Growth has been moving inland from the coasts, while at the same time the city has been fairly insulated from the international recession. But the main reason for the boom, as everyone there cheerfully admits, is government support. The central government is very anxious to even out the huge development gap between the coasts and the interior, and Chongqing has been designated a “growth pole” for western China. It has been a recipient of favorable policies and public investment at least since it was split off from Sichuan province and made a provincial level municipality twelve years ago. Most recently, Bo Xilai, formerly head of the Ministry of Commerce, son of former Politburo member Bo Yibo and a high profile official, was made party secretary of Chongqing, and it’s understood that his brief for the job is to open the throttle on economic growth.

In Chongqing city itself the boom is most apparent in the new downtown taking shape across from the historic center, on the north bank of the Jiading river, and in the new high class towers and hotels shooting up on the other side in the Nan’an district. As with much new construction in China, the scale of development is overpowering. As you drive down the immense boulevards between one half finished patch of towers after another, the unavoidable question is, “Who is going to use all this?” But for all its Brobdingnagian scale, it’s not Chongqing’s new downtown that gives me pause. I worry instead about the new downtowns of the small city where I was, an hour’s drive away through the rugged hills, and its cousins all across China. It seems nearly every city in the country has a “new city” or “new district,” often at least as large as what’s already there. I don’t know how to estimate the amount of planned space in all the new districts across the country, but I guess it would give economists and government planners a cold sweat.

Of course, planned is not the same as built. But a significant amount of space in these new districts is in fact under construction. Some of it is government offices, some is public facilities, some is relocation housing for people whose former homes are becoming reservoirs, highways, railroads, or denser and more expensive housing. And a lot is market rate housing. Chinese demographics can support an immense amount of housing development. The population is simultaneously growing and urbanizing, and the average living space per person is still quite low. Sure enough, there is an immense amount of housing being built – but there is reasonable doubt whether it matches the demand. Despite the dizzying amount of construction, China’s major cities have a housing affordability problem, and during the recent downturn developers showed they were generally more willing to sit on empty units than to lower prices. In vacation markets (existing, planned and hopeful) luxury villas and second home condominiums are everywhere.

Still, all this new housing is finding buyers. After a bumpy couple of years, the housing market is sharply up this year. But how many of the units sold are just speculative investments, subject to a western-style price collapse? The Chinese public has a high savings rate and is simultaneously facing very low interest rates and fears of inflation. With almost the only alternative investment vehicle available the notoriously fickle and opaque domestic stock markets – and with the government determined to support the housing industry as a bulwark against recession – intense speculation in the housing market is hardly to be wondered at. As previously noted here, a lot of the tremendous bank loaning in the first part of the year has leaked into property markets as well. Anecdotally, it’s clear as you travel around China that a lot of new housing sits empty, waiting for appreciation – the investors have not even bothered to rent it out.

If there is a housing bubble, the question is how big it is, and whether it can be safely deflated once the immediate danger of recession is past. Central economic planners are watching this carefully, and while the official line is that the economy is still weak and that a moderately loose policy will be maintained through the end of the year, I guess that once it’s decided that it’s safe to pull back that more restrictive housing policies will be among the first out the door.

- Don Johnson

Guest contributor, Infrastructure, Investment, Property, Regional

Han Han is a celebrity racing driver, novelist, and budding public intellectual - an outspoken and flamboyant critic of many aspects of Chinese society.  On his blog, which is extremely popular amongst young Chinese people, he has spoken out against the CCTV fire, the vitriolic campaign against Sharon Stone for her ill-advised ‘karma’ comments on the Sichuan earthquake, and the Green Dam web filtering software pushed by the government.

Now he has turned his ire on ‘The Founding of a Republic’ - the epic of the founding of Communist China that is taking the box offices by storm as the People’s Republic prepares to celebrate its sixtieth anniversary.  Here is my translation of his review:

‘As I was watching this film, I wondered if the director and the actors where being satirical?  It made me think there was a great film waiting to be made, this film stops in 1949 - the great film would end in 1976.

In 1949, a sincere people placed their hopes in Mao Zedong and a new China.  60 years on, the people still don’t have one square foot of earth to call their own, everyone lives as a parasite.  Back then, society was composed of lots of classes, now there are only 4 - the poor, the house slaves, the wealthy and the billionaires.

In another way, the film is like a love story, a penniless little boy in love with a rich woman.  The communist party is the little boy, China is the woman, and the non-communist parties and the girl’s friends stand in the path of the union.  The little boy succeeds by talking about ideals, making promises, writing worthless cheques, and of course the odd scuffle.  At last he succeeds in marrying the new China.

The only thing we learn from the film which is completely accurate is when the Communist Party occupy Shanghai and seize all the most desirable property.  If you want to get the girl you have to have a nice house.’

Hard hitting stuff.  You can see more about the film here and Han Han’s blog is here.

Culture, History

One year ago, in a speech in Anhui province, President Hu Jintao seemed to make a committment to solve one of China’s most complicated and pressing social problems - land reform.  Giving China’s 700m peasant farmers legal title to the land they farm would do more than perhaps any other policy to make a reality of the current leadership’s committment to build a harmonious society. 

But no sooner had President Hu spoken, the financial crisis erupted and land reform was off the government’s agenda.  In an article in today’s WSJ China, Prof Scott Rozelle and I argue that the time to return to China’s stalled land reform has arrived.  You can see the article in Chinese here.

Agriculture, Financial Crisis, Labour markets, Social Policy

A one-child policy which has deprived a generation of brothers and sisters, fierce competition in the school system which mean friends are few and far between, and a work ethic which means many parents spend little time with their children, means many young people in China are quite isolated, have few friends, and prefer surfing the internet to social activities. 

This phenomenon is so common that there is even a word for it: 宅男宅女 (zhainan zhainu - stay at home man, stay at home woman).  I also recently learned a new word which describes what happens to 宅男 and 宅女 after a few years.  They become 剩男 (shengnan - left over man) or 剩女 (shengnu - left over woman)  - unmarried and unwanted, destined for a lonely existence.

In recent months, a new pop culture phenomenon also speaks to the importanced of this issue of isolated and unsocialised youth in China.  The phrase ‘你的妈妈找你回家吃饭’ (nide mama zhao ni huijia chifan - your mother is calling you home for dinner) has taken on a life of its own on the Chinese internet.  The phrase, which every Chinese young person will have heard playing in the street as a child, is a poignant reminder for isolated young people of the warmth and affection of home and family.

The phrase resonates so strongly that there is even a website where you can insert the name of a friend or colleague, to remind them of the time when their mother would call them home for dinner.  You can see an example here.

Culture, Social Policy

In the first half of 2009, for the first time, China’s top 500 firms were more profitable than their US counterparts.  But as those profits were built on subsidized input prices, government set output prices, and monopoly control of the markets they occupy, is this anything to be proud of?

An article in the latest issue of Southern Weekend  argues that the strength of China’s state owned firms is in part an illusion created by the various subsidies and supports they benefit from.  What is more, the author points out, these subsidies and supports are paid for by consumers and tax payers.  If China’s firms are amongst the most profitable in the world, this is in part because China’s consumers and tax payers are paying an unfair price.

This is my translation of the main points from the article, which starts with a discussion of health reform in the US, and the monopoly power of the giant US health care providers:

‘In the Chinese economy, electricity, oil and energy companies are like the US health care companies, they have the power to shape legislation, to determine prices, and to block the path of consumers to influence policy.  Sectors with 2 or 3 big firms can demand changes to pricing policy, subsidies, profits into perpetuity.

On the 5th September, new statistics showed that in the first half of 2009 the income of the top 500 Chinese companies was substantially less than the income of the top 500 US companies.  But net profit for the top 500 Chinese companies was already higher than for the top US companies.  The fact that income for Chinese companies is lower but profit is higher shows clearly that the operating environment for Chinese companies is more favourable than for their US counterparts.

But what really surprised people was that in China this year the price of energy (set by the government) was much higher than international prices.  That meant the prices for manufactured goods were also much higher (since manufacturers were paying more for their energy).  In the end this means that tax payers and consumers are paying a subsidy to state energy companies.

On the same day as the statistics were released, Li Rongrong of the State Owned Assets Supervision and Administration Commission (SASAC - the arm of the government which oversees its interest in the state owned enterprises) said: ‘today we are discussing the 500 strongest companies in China, but really we are discussing the 500 biggest companies in China.  Companies shouldn’t just be big, they also need to be strong.  If a company is strong but not big, it has no influence.  If a company is big but not strong, sooner or later it will collapse, and its collapse will have repercussions’

Li Rongrong also said that it does not matter if a company is state owned or privately owned, at its core a company will always pursue its own self interest.

These 500 companies are like the firms in the US financial sector, they are ‘too big to fail’.  They control the bulk of our country’s natural resources, they control prices faced by consumers, they face no real competitive pressures.  The first step to taking these state controlled companies into the market, must be to smash the control of key sectors by special interest groups, and ensure the prices in these sectors are set by the market.

In the US, reform of health insurance started under the Clinton administration and now has resumed under the Obama administration.  The reason for the delay is the power of industrial interests to deter the people from pursuing the public interest.  In China. facing the need to reform the state owned sector, we face a similar problem, and we must be vigilant that we do not go down the same route.’

You can see the original article here.

Competition, Energy, Industry

One of the subjects on the agenda for world leaders meeting in Pittsburgh on 24-25th September will be where the future sources of global growth are going to come from.  I have an article on the subject in this week’s New People Weekly.  You can see the Chinese text here or read the English version below.

China, the G20, and the future drivers of global growth

Where are the future sources of global growth?  With the immediate crisis over, this is the question that will exercise the minds of G20 leaders meeting in Pittsburgh on 24-25^th September.   The United States might be preparing to declare and end to the recession, and European powerhouses France and Germany might already have returned positive momentum to their economies.  But expectations for the future growth of the world’s advanced industrial economies are muted.  The experts at the IMF expect 0.8% growth in US GDP in 2010 and a 0.3% contraction in the euro area.

As the sun sets on the West, the G20 will hope that it rises on a resurgent East, with China in particular making a stronger contribution to global growth.  China’s swift and decisive policy response to the economic crisis, a response that has seen it emerge first and strongest from the downturn, has raised hopes that the Middle Kingdom will be able to assume an enlarged role in the world economy.  In the past, China’s massive trade surplus has taken away from demand in the rest of the world.  By selling more than it buys, China has borrowed demand from its trade partners in the US, EU, and elsewhere.  In the future, it is hoped, the roles will be reversed.  As China’s 1.3 billion population enter the world economy not just as producers but also as consumers, China will be able to return the favour and make a positive contribution to increasing  demand in its trade partners.

The concern amongst economists, however, is that the same policies that allowed China to exit first and strongest from the downturn will make it more difficult for it to make a play a role as a future driver of global growth.   China’s response to the crisis has been not to take steps to increase domestic consumption but rather to make a massive increase in investment.  The National Bureau of Statistics estimates that in the first half of the year, investment contributed 6.2% to China’s growth, with just 3.8% coming from consumption and a drag from exports. 

Investment might solve the short-term problem of kick starting China’s economy.  But in the long-term, a massive investment programme will reinforce the Chinese economy’s existing bias toward export led growth.  Building more industrial capacity, the story goes, will add to China’s surplus of productive capabilities.  As more and more goods role of the production lines of the Pearl and Yangtze River Deltas, China’s export surplus will be increased, not reduced, and China will continue to borrow from, not contribute to, the total demand of its trade partners.

The problem with this story is that whilst China’s investment in fixed assets has increased massively in the first half of the year, the vast majority of spending has not been targeted at industrial capacity but rather at public infrastructure.  China’s response to the crisis has been to build more roads, railways, and airports, to improve the electrical grid and agricultural irrigation systems.  That might mean that some Central and Western cities now have a shiny new airport that is not justified by the current volume of air traffic.  But it does not mean that China has been further biasing its economy toward an export led growth model. 

This is not to say that there is no industrial overcapacity in China.  The Ministry of Industry and Information Technology has pointed to the steel, shipbuilding, and cement sectors as areas of the economy with significant and growing excess capacity.  But for some of these sectors, for example cement, the final product is not exported, so overcapacity in China will not mean a drag on demand in trade partner countries.  For others, overcapacity is certainly an issue, and the world has already felt the consequences of overcapacity in China’s steel sector depressing world prices.  But with growth in China as rapid as it is, even 100% overcapacity would be reduced to zero within a decade.

Industrial overcapacity will not prevent China from stepping up to a role as a driver of global growth.  But the origins of the problem of overcapacity point to a deeper imbalance in the Chinese economy, and one that will impact its capacity to contribute to demand in the rest of the world.  The problem of overcapacity stems from the imbalance in the Chinese economy between the outsize profits enjoyed by the industrial sector and the slower income growth enjoyed by China’s households.  Outsize profits have allowed the industrial sector to make the investments necessary to make China the world’s factory.  But with income growth stunted, Chinese households consume less as a percentage of GDP than any other country.  According to official statistics, retail sales accounted for just 36% of GDP in 2008.  With a significant amount of government spending included in the retail sales figure, the real share of household consumption could be much lower.

A first step to increasing the share of consumption in China’s GDP is increasing household income.  The biggest barrier to achieving this objective is China’s enormous population.  With tens of millions of migrant workers, recent graduates and urban unemployed jostling to enter the labour market, there is a natural downward pressure on wages.  This problem is exacerbated by a growth model that gives too great a weight to heavy industry (a sector which tends not to create many jobs) and too small a weight to services (a sector that tends to create a lot of jobs).  The service sector is growing, but restrictions on market entry that protect the monopoly position of state owned giants are a barrier to more rapid expansion of the finance, transport, communications, logistics and media industries.  With every yuan invested in these sectors creating more jobs than a yuan invested in heavy industry, stripping away the monopoly controls enjoyed by state giants would be a significant contribution to job creation, and to raising the share of household income in GDP.

Raising household income is a necessary but not a sufficient condition for raising consumption.  The reason Chinese households consume so little is partly because their income is low.  But it is also because with health, education, and retirement income provision so weak, they have little choice but to save an inordinately high percentage of their income to insure against accident and prepare for the future.  The government has made major commitments to free universal education and some form of free universal healthcare.  But without a commensurate increase in spending from the central government, there is a danger that these commitments will translate into an unfunded, and so also undelivered, obligation placed on provincial and sub-provincial governments.  The government has said that the fiscal stimulus will remain in place for the remainder of the year and perhaps beyond.  With the basis of the recovery still unstable this is the right decision.  But with the worst of the crisis over, the government should shift the focus of stimulus spending to necessary investments in social services.  In this way, the government can make a reality of its welcome commitments to improve healthcare and education, lifting the burden of welfare spending off the backs of hard-pressed households and freeing up their resources for consumption. 

China’s rapid response to the financial crisis has raised the G20’s expectations for the role it can play as a driver of future growth.  But to live up to those expectations, and to place its own economy on a path of sustainable expansion, China will have to move away from the policies that have driven growth throughout the reform era.  If China is to increase its contribution to global growth, the era of heavy industry and export led development must draw to a close, and the transition to an economy driven by domestic demand must begin in earnest.

Financial Crisis, Industry, Trade, US-China Relations

President Obama’s decision to impose three years of tariffs on tire imports from China has raised fears of escalating trade disputes.  Judging by comments people have posted on the Ministry of Commerce bulletin board, at least some Chinese people are spoiling for a fight.  This is my translation of the first few comments:

‘China should impose punitive tariffs on US soybeans and cars.’

‘The Ministry of Finance should publish all related documents so we know that they are defending the national interest.’

‘Where are the experts now who tell us that US is an ideal of good governance, justice and fairness?  As Chairman Mao said: ‘If you don’t push me, I won’t push you, but if you push me I will be obliged to push back.’  The government should not underestimate the peoples resolve to fight!’

‘First, we should impose a 300% tariff on soybeans from the US for five years!  Then we should dump US debt.  An eye for an eye!’

That’s just the first few of 30,000 comments posted in the last day.  Public opinion appears to be vitriolic, and this - along with the economics - will be a constraint on how the Chinese government responds to the problem.

You can see the original comments here.

Trade, US-China Relations

Last week was an important one for economic data releases.  Data on trade, investment, consumption, and industrial output in August were all released.  For many China watchers, the focus was on the disappointing export figures and the encouraging rebound in real estate investment.

But for at least one Beijing newspaper, the headline grabbing statistic was a 0.5% year-on-year increase in food prices.  The fact that the New Beijing Times (新京报 － Xin Jing Bao) chose the tiny increase in food prices as their front page story says a lot about economic priorities within the nation’s capital.

The paper notes that this is the first time food prices have increased in the last 6-months.  They add that in his speech at the World Economic Forum in Dalian last week, Wen Jiabao departed from the familiar script on the economic recovery to mention the risk of inflation.  And that the Ministry of Commerce’s index of agricultural prices has shown increases in each of the last 9 weeks.

A spokesman for the National Bureau of Statistics said ‘the increase in food prices reflects strengthening domestic demand, but we are completely confident that food prices will remain stable going forward.’  A spokesman for the Ministry of Agriculture said: ‘though some areas of the country have been affected by drought, barring any unforeseen disasters, we are expecting a good harvest.’

Why did the New Beijing Times lead with the food price story when trade or investment figures speak more loudly to the current state of the economy?  I think there are two reasons.

First, food prices are a big deal in China.  Last year’s food price inflation had President Hu Jintao out in the food markets conversing with peasant vendors and local shoppers, inquiring about price changes and their impact.  Food makes up a substantial part of China’s household spending, and the poorer you are the higher the percentage of your income you spend on food.  So changes in food prices can quickly translate into popular discontent, and it is only a short path from popular discontent to social instability.

Second, the massive monetary stimulus in the first half of the year has created the right conditions for inflation to take off.  So far, most of the new money that has been created has flowed into capital markets (equities and property) and that is where we are seeing the price rises.  If it starts to flow in goods markets then we could see inflation accelerating pretty quickly - and that is something the government will be paying close attention to going forward.

Here’s the original article.

Agriculture, Monetary Policy

Who are the heroes Chinese people look up to?  One website has taken votes from the public on who they most revere and the results make interesting reading.

Many voters found Dong Cunrui’s story to be inspirational.  Dong, born in 1929 and died in 1948, was an unlikely hero.  Short and with unfortunate features, he died a martyr in the war against the nationalists, storming a heavily fortified enemy post with a hand grenade.  His heroism inspired the rhyme: ‘Dong Cunrui ge bu gao, guanjian ke ju guanjian bao’ which translates as ‘Dong wasn’t tall but he packed an explosive punch.’

One of the most popular of all the Chinese heroes, with more than 4000 votes, is Lei Feng.  Lei Feng was born in 1940 and died in 1962.  His short life was marked by selfless dedication to the ideal of building a socialist China.  He died in a tragic accident and Mao Zedong himself began the campaign to position him as a national hero with a speech exhorting young people to ‘learn from the example of Lei Feng.’  His story has been immortalized in the lessons taught to generations of school children.  The 5th March every year is ‘Lei Feng study day’ when the nation is meant to reflect on and learn from Lei Feng’s selflessness.

The Legend of the Red Lantern  is one of the Eight model plays, the only operas and ballets permitted during the Cultural Revolution in China. In the play, Li Tiemei’s grandmother tells her the story of her father’s revolutionary exploits against the Japanese.  Li Tiemei is motivated to live up to her parents example and realise the vision of the revolutionary generation.  311 online voters found her story to be inspirational.

Marshal arts movie star Jet Li started his career as a professional marshal artist, dominating the sport and representing China around the world, before finding even greater fame as a film star - most recently co-staring with Jackie Chan in The Forbidden Kingdom.  Jet Li garners 3600 votes.

Another example of self-sacrifice comes from Lai Ning, a 13-year old boy in 1980s Sichuan who gained a place in the history books but lost his own life saving other children from a fire.  More than 6000 voters said he was their idol.  Funnily enough, Sichuan has recently generated another selfless child-hero.  9-year old Lin Hao ran back into his collapsing school in the Sichuan earthquake and saved several of his classmates.  You can see an interview with him here.

Zhou Xingchi (Stephen Chow) is one of the most prolific and successful Chinese directors and actors of the 1980, 90s and 00’s.  Starting his career with some rather puerile comedies in his native Hong Kong, he graduated to a series of very funny historical dramas, a brilliant re-imagining of the great Chinese novel Journey to the West - where he played the central Monkey King character, and most recently a series of comedies that have found an audience outside China - including Shaolin Soccer and Kungfu Hustle.  His most recent film, CJ7 was not only hugely popular and very funny but also a sensitive treatment of the experience of migrant workers and their children.  He gets 3600 votes.

Xu Sanduo is a fictional character in a popular TV show about life in the People’s Liberation Army.  Ever smiling, ever cheerful, reliable in his deeds and careful in his words, he is in many ways a modern fictional reworking of the Lei Feng myth.  He gets 3430 votes.

The authors of the website note that as the times have changed, China’s idols have changed with them.  In the 1950’s, it was still heroes of the war against the Japanese and the nationalists that dominated the pantheon.  In the 1960s, it was those who worked selflessly to build a socialist economy that the people were encouraged to venerate.  In the 1970s, a combination of a romantic longing for the past and an official policy of idolising the peasants meant the emergence of heroes from the agricultural world.

In the 1980s, heroes started to emerge spontaneously, from amongst the people, rather than being carefully crafted by the Communist Party’s propaganda department.  In the 1990s, the fame cycle was shortened.  Idols whose appeal was based on sex appeal or outspoken views caught the attention of rebellious youth, but their time in the sun was shortened by a media hungry for new faces.  This decade, according to the website, there is a dearth of real heroes, and instead China has the unreflecting, meritless and ephemeral heroes of a consumer culture.

The number of voters participating in the websites pole is rather limited, but it’s interesting that military heroes continue to enjoy such a strong popular following, and that the heroes crafted by the Communist Party’s propganda machine continue to exercise a powerful hold on the popular imagination.  The authors of the website bemoan the froth of modern celebrity.  There is certainly a shockingly vapid strain to much of China’s pop culture.  But in my view people like Stephen Chow are rather more substantial and provide a compelling narrative of the nation - which is what idols are meant to do.

Culture, History