It has been nearly two years since Covid-19 emerged in December 2019. Two years may not be much over a lifetime, but as a phase it is long enough. Most people have been deeply affected—not only in income and employment but in how they judge value and what they expect from life.
Work that feels meaningless
Recently I have heard many people complain that their jobs are meaningless. The work is simple and repetitive, and they see no prospect of change. The complaints come from ordinary office workers, bank account managers, regional managers at insurance companies, experienced software engineers, middle managers at state-owned enterprises, and capable civil servants. It is not one occupation. A wide range of jobs feel stale, and the people doing them cannot see a future in them. These jobs have existed for a long time, but they have rarely been complained about in such concentrated fashion.
So I wonder whether work itself has changed or whether we have. My guess is that the pandemic changed our way of life and our economic expectations, and that this has led us to reconsider what work means.
Scam calls and the police who call back
Many industries have been hit hard during the pandemic, but fraud does not seem to be among them. Last week my wife received two scam calls in a row. Almost immediately after she hung up, an officer from the Beijing anti-fraud center called to warn her not to trust the callers. I am grateful to the police; their work keeps more people from falling into these traps.
But I am curious about how they identify scam calls. I searched online and could not find an answer. Do they analyze calling behavior with big data and monitor or screen high-frequency numbers? Or do they run sensitive-word recognition across all calls? If it is the latter, the workload would be staggering.
Overconsumption and underconsumption
In 2018, several relatives and friends asked me for loans, even though I might have been poorer than they were. At the time I wrote about how Chinese people’s attitude toward saving was changing. My argument was roughly this: as the economy grew and social security improved, people’s saving habits changed, and active consumption was a good thing.
This year, relatives and friends have again asked me for money, for various reasons. Some said they could not get by. I can easily understand hardship during the pandemic. But why did some of the same people who borrowed because life was difficult keep posting photos of good food and travel on social media? It became clear that their lives were not really unlivable. Their refined lifestyle was no longer sustainable. The question is why everyone feels compelled to pursue a materially refined life.
For people who borrow from every direction just to maintain that kind of life, this is clearly overconsumption, and there are quite a few such people. Yet if this idea has such a hold on so many people, why does the country still suffer from insufficient consumption? That is an interesting question.
“Same speed for everyone” on cloud storage
On November 17, 2021, under the guidance of the Ministry of Industry and Information Technology, the Internet Society of China and the China Academy of Information and Communications Technology organized major personal cloud storage companies to draft and sign a self-discipline convention on protecting user experience. The convention commits companies to “non-discriminatory speed”: free users and paying users would get the same download speed.
I am not very supportive of this. Cloud storage is a commercial service. Download speed is not a matter of national livelihood, and the government should not directly interfere with this business model. Cloud storage is also a heavy-asset internet service that is difficult to make profitable. Its main revenue comes from membership fees, and the main reasons people pay are fast speed and large capacity. If providers really implement “non-discriminatory speed,” they will have to cut capacity instead—perhaps giving free users 1 GB and charging for the rest. Another route is to limit free traffic and force users to watch ads after they use it up, with viewing time tied to the traffic they receive. The ads could even be interactive.
In the free era, cloud storage operators could offer free capacity and traffic largely because intellectual property protection was weak. A large number of free users uploaded films, music, and other resources that became content for the platforms, while a small number of paying users who needed heavy downloads paid the bill for the free users. This model is similar to free-to-play online games: paying players derive pleasure from free players. What would happen if games were forced to provide identical service to free and paying players?
I suspect that if the convention is seriously enforced, cloud storage operators will have three possible responses. First, cancel free space. Second, limit high-speed traffic and make money through advertising. If both are forbidden, the third response is to exit the business. Cloud storage has high costs. Offering free, identical service to all users is not a commercial act. It has nothing to do with morality or conscience; it is a matter of survival.
Price as a filter for demand
Price is a filter for demand. It selects the most urgent needs from an individual’s endless desires, and across society it selects the consumers who most urgently need a particular resource. If policy constrains the pricing mechanism, supply and demand for that good or service will inevitably become disordered, damaging the stable development of the market.
The statement that the market should play a decisive role in resource allocation has been mentioned many times in recent Party meetings and government work reports. Yet government interference in prices as a visible hand remains common. Economic reform clearly still has a long way to go.
Central SOE headquarters leave Beijing
Recently, the relocation of central state-owned enterprise headquarters out of Beijing became a headline topic. Almost all media interpreted it as an effort to relieve the capital’s core area—inside the Second Ring Road—of functions that are not central government functions. But I think it may also be a move to de-administrate central SOEs. Most Chinese central SOEs correspond to a “vice-ministerial” administrative level, which gives them an administrative identity beyond their corporate identity. In recent years China has continued market-oriented reform of central SOEs. One part of that reform is moving from managing people to managing capital, thereby reducing administrative attributes. The central government’s forceful relocation of headquarters out of Beijing may well be part of this.
There are 96 operating central SOEs. Five are in Shanghai, five in the Northeast, four in Guangdong, two in Xiong’an in Hebei, one in Chengdu, four in Hong Kong and Macao, and the rest are in Beijing. Reverse the question and it becomes easier to understand: Beijing is not China’s financial center, nor its commercial center. Why have central SOE headquarters tended to stay in Beijing? What advantage are they looking for?
Reform is not easy
Many small signs show that the central government’s determination to pursue economic reform is firm. Even the shock of the pandemic has not changed that course, as I have argued repeatedly. But local governments and state-owned enterprises have not always kept pace with the central government and have been reminded of this many times. No reform is completed easily.
[1] Human desires are infinite, but the ability to pay is limited. Price is the index that quantifies infinite desires. Only after quantification can individuals and society know what is most needed.