[orwin]

> But subsidizing with what? They don't have a magic money tree.

They do though. The advantage of state capitalism is that at anytime you can switch from a fully capitalist economy, where the market is everywhere save the family cell, to a statist economy where the state decides what goes where, to anything in between. If the CCP says 'retirement won't be paid in RMB but in foodstuffs for everyone, and the funds are reappropriated', they kill their debt.

[rich_sasha]

Right - but means of production can't be created and destroyed from nothing. Proper centrally planned economies all thought it could and failed.

China is much more free at moving them from one place to another, in particular allocating them differently to the hedonistic preferences of their citizens.

But it's still only moving not creating. For now it seems, the thing that needs to give is the workers' consumption. What else? No idea.

[orwin]

Means of production are created from human labor and natural resources. Money and debt are a good way to allocate those resources in a more or less "fair" way across time, and markets are a good way to allocate both resources, money and debt across places (that what they were created for at first).

But they are not the only way, you can go back to a more autarkical model for the rural population, or to a more directed economy like during WW2, or a mix of both. Also, if i want to be exact, i don't think China is totally capitalist yet anyway, you still have rural villages that does not allocate all resources through the market.