Shocked and Persuaded


Separating Fact From Fiction

This Ain’t Mao’s China

So with the advent of the neo-capitalist agenda in China circa Deng Xiaoping‘s invoking of the Four Modernizations in 1978 we are seeing a new China Same as the Old China. Chairman Xiaoping’s Four Modernizations were meant to fuse the Good of Capitalism with the Supremacy of Mao’s Vision. They addressed Agriculture, Industry, National Defense, and Science & Technology (EARTH TO TEXAS SCHOOLBOARD!!!). Anyway it seems that this fusion has taken what appears to be a pro-bourgeois turn for the worse if a recent piece in The Economist is any indication. Next thing you know we’ll be hearing that the C-Class of China’s Big Four Banks are or will shortly be receiving large bonuses based on short-term, highly leveraged, overly creative, and socially useless financial instruments. NO WAIT THAT COULD NEVER HAPPEN!

“The ruling by Pudong’s district government—Circular 301, as it is officially called—allows these subsidies to be paid to “qualified financial talents working at qualified financial institutions”. Upon approval by regulators, senior managers can receive a reimbursement of 40% of their taxes, plus a housing subsidy. That pushes their tax rate down to 27%, still higher than Hong Kong’s 15% and Singapore’s 20% but well below what a banker would pay in New York (44%) or London (soon to be 50%) or for that matter Tokyo (50%) or Seoul (35%).

Bankers who are not quite so important get a not-so-grand tax break, roughly half as large. More junior staff get nothing. The same system of targeted personal-tax breaks for senior executives was apparently successfully used in Beijing to entice financial firms to move from one side of the Forbidden City to the other, to an area called Financial Street. Once the leading global firms had moved their offices, the tax rebates were allowed to lapse. The same will probably happen in Shanghai. But for now, if you’re a capitalist-roader, the people’s party is pretty hard to beat.”