Today it is no longer possible to say exactly what plan Mao Zedong had when he launched the “cultural revolution” in 1965. It seems to me that he wanted to repeat Stalin’s plan for the end of 20 – 30 with the construction of a self-sufficient technological zone, and for this he needed to achieve two results: first, get out of the Soviet system of division of labor, and second, find “ primary "source of technology (as is clear, after reaching the first effect, the USSR did not fit as such a source). Since only the USA was an alternative to the USSR, all of China’s activity was concentrated in this direction.
However, the US was silent in 1965 – 1966, when China smashed that part of its elite that was oriented towards the USSR, and in 1968 – 1969, when it switched to direct military provocations on the Soviet border ... US capital, after 15 defaulted on August 1971, Secretary of State Henry Kissinger arrived in Beijing, and in the following year, 1973, US President Richard Nixon arrived. And the agreement was reached. The main one was the opening of American markets for Chinese goods.
However, Mao Zedong was already dying, and his successors, most likely, changed the plan he was preparing for China. It is precisely due to the fact that China received more than he wanted. Mao could only rely on some technologies that would allow him to develop the domestic market, but it turned out that a practically unlimited foreign market was opened for China. And the Chinese leadership decided to use it as a multiplier for internal growth.
The path that the USSR went through for many decades, China has slipped through almost fifteen years. However, he got into a situation that today creates many problems for him. The fact is that the USSR was guided by the domestic market, in which there was a low rate of profit (due to the poverty of the population). And for this reason, Stalin pulled the entire population of the USSR towards a higher standard of living - because it helped expand the base of the reproductive contour of the economy. Yes, the gaps between town and country, between some regions remained, but nevertheless the surplus product was distributed, in general, equally - because this, as written in all textbooks, provides the maximum increase in private demand.
In China, there was no such problem — at first, the foreign market was limitless. And it was necessary to maximize the range and quality of goods in order to get more and more profit from this foreign market. At the same time, it was more profitable not to invest millions and then billions of dollars in the development of a poor village at first, but to expand the scale and quality of export production, since in the next step the export of more complex products brought much more profit.
As a result, China has developed two sectors of the economy. One is focused on external demand, in which a rather high rate of profit (of course, it drops over time, since foreign markets are close to saturation), the second is focused on domestic demand. In it, the rate of profit is extremely low, most likely, even really negative (consumers are subsidized from the budget). At the same time, wages in the domestic sector are low (since it works on itself), and in the export sector - quite high. This is connected with the desire to stimulate the quality and scale of production, and with the fact that a high level of division of labor has developed for high-tech industries, which inevitably raises salaries. And the money with which the authorities subsidize the “internal” sector of the economy will inevitably fall into the export sector - because it has a higher profit rate.
To understand the difference of these sectors, you can bring the level of income. In Beijing and Shanghai, the normal salary is 1000 dollars per month, while the level of poverty in China since the beginning of 2012 is the income of 1,5 dollars per day, and more than 100 million people live below this level of income. It is clear that people with such incomes cannot buy products manufactured by the export sector - and even loans do not help here, since there is no income for their return. But representatives of the export sector do not want to buy products manufactured by the “domestic” sector, because it is of poor quality (too cheap). Of course, this barrier is not absolute, but it is quite serious and, most importantly, is growing all the time.
In recent years, China has been solving an important problem — deepening the division of labor requires a new, quality labor force, that is, new sales markets and higher wages. But foreign markets are shrinking (there has been a crisis, and the US is directly opposing the growing activity of China), and the domestic market cannot support the deepening division of labor in China - the export sector is too far away from the domestic one. And what to do in this situation?
Theoretically, there are two options. The first is to lower the export sector of the economy to such a level that its products can easily buy domestic. But this means dramatically reducing salaries at least 5 – 6 times, which would make it impossible for most of the workers in this sector to live in big cities. In general, it is almost impossible for social and logistic reasons - the production structure will be disrupted.
The second is to sharply raise the level of demand of a part of the population in the “domestic” sector of the economy so that it can buy products that are previously exported. It is clear that everyone does not need to give money, but a significant part needs to greatly increase state subsidies. Which for the reasons already described fall into the financial sector and begin to create problems there, since the main assets underlying these flows, credit obligations simply cannot be fulfilled under normal conditions.
Of course, all this is not a secret for the Chinese authorities. They are trying to solve the problem, for example, relocating the poor population to the cities in order to lower salaries in the export sector, which will allow reducing costs and profit margins - at least when selling products from the export sector to the domestic one. I note here one important circumstance: we are talking about “intersectoral” trade, that is, the purchase by people who receive income from the sale of their labor in the domestic market, goods created in the export sector. Services and goods sold within the export sector pose no problems.
However, the gap is too large - the incomes of the two sectors of the economy differ not by tens of percent, but by several times. Accordingly, the interaction of the sectors begins to create serious problems in them: the domestic sector cannot afford to buy modern goods, and the export sector - to reduce revenues and profit rates in order to sell these goods. In other words, China’s colossal population has ceased to be its main economic trump card: the poor population serving each other can no longer support the intensive (that is, with the deepening division of labor) export sector. It seems to me that this situation cannot do without a serious “explosion”, but this is not even the case, but the fact that it is not very clear how China will save its modern economy - there will simply be no markets for it. Note that in this sense he has practically the same problems as the United States, only in a slightly different form.