Whilst Britain’s Labour government continues its war on the price mechanism, Communist China wrestles with the ill effects of an extreme capitalist competition that it has unleashed across its own economy. State subsidies to various industries have encouraged such fierce price wars that margins have disappeared as quickly as protesters in Tiananmen Square, and left a glut of products unable to be absorbed by domestic consumers.

Bulldozing through all normal market mechanisms has led to huge problems in the Chinese economy

Bulldozing through all normal market mechanisms has led to huge problems in the Chinese economy

This is ‘Nei-juan’, the economic phenomenon that is wreaking havoc across China, but is almost unheard of outside the Middle Kingdom. This needs to change, because the Chinese Communist Party’s (CCP) attempts to deal with this crisis will have enormous repercussions on the global economy and on the great power rivalry between the US and China.

Literally ‘curling inwards’, nei-juan is instead often translated as ‘involution’. Originally a term used to describe agricultural economies that fail to translate more work into higher productivity, involution was picked as a term by the growing Chinese middle class to describe the horrors of the 21st century rat race. This first looked like intense 7-days-a-week work, exam preparation (‘gaokao’) for students that is so intense that images have been shared of pupils attached to IV drips so as not to break their studying, and the general demoralising effect of working ever harder for ever less.

From there, the term developed to encompass big macro-economic trends in China. Ever since the ‘opening up’ of the economy in the 1980s, there has been an embrace of market mechanisms that seem utterly heretical to the pure Communist ideology of earlier generations. Under Xi Jinping, however, the undoubted surpluses and growth only possible under a market economy have been ever more co-opted back to serving the political ends of........

© The Spectator