It’s the billions of cigarettes a year that pay for everything else.
In the midst of Xi Jinping’s anti-corruption campaign in 2013, the Chinese Government came to officially ban that at banquets and public events of officials there would be cigarettes on the table. The detail seemed symbolic, but it reflected the extent to which tobacco was embedded in the political and economic culture of the country. The silent business that sustains too much. When talking about the Chinese economy, the conversation usually revolves around of electric cars, solar panels, batteries either rare earth. However, one of the most important financial pillars of the Chinese State remains much older, less glamorous and much more profitable: tobacco. I counted this week the new york times that China consumes about half of all cigarettes on the planet and sells about 2.4 billion units a year, a figure so gigantic that it turns the country into a global anomaly. While much of the world reduces tobacco consumption, China has gone in the opposite direction. And it is not just a cultural or health issue. Behind it there is an immense economic and political machinery: the state tobacco monopoly generates around 244 billion dollars annually in benefits and taxes, an amount equivalent to about 7% of all Chinese central government revenue and comparable to the country’s official defense budget. The personal contradiction of the “boss”. The paradox is even more striking because Xi Jinping stopped smoking years ago and, according to reported the Timesto people present in private conversations, went so far as to describe smoking as a serious problem for China. Plus: during his first years in power there seemed to be a certain political will to tighten restrictions, even banned smoking for officials during official events and Beijing adopted limitations in indoor spaces, in addition, in 2015 taxes on tobacco were raised. Even Peng Liyuan, the Chinese first lady, publicly participated in anti-smoking campaigns with Bill Gates. But the momentum quickly faded. The reason seems obvious: the Chinese State depends too much of cigarette money. The same government that promotes futuristic industries and constantly talks about technological modernization continue financing part of its stability thanks to millions of people smoking cheap three-dollar packs. The most powerful monopoly in the country. The heart of the entire system is the State Tobacco Monopoly Administrationan extraordinary structure even by Chinese standards because it regulates the sector and at the same time controls the dominant company that makes virtually all of the country’s cigarettes. That is, the regulator and the business are the same thing. Its economic power has translated into direct political influence. The heads of the organization have a rank equivalent to that of vice minister and several Chinese academic investigations have openly pointed out that the monopoly has blocked or diluted many important health initiatives. The clearest example came around 2017, when an attempt was stopped to implement a national ban on indoor smoking and moved the responsibility to local governmentswhere restrictions are usually weak or barely applied. Financing much more than tobacco. The most revealing thing is that tobacco money is no longer just supports local budgetsbut also some of the great strategic priorities by Xi Jinping. The monopoly has invested more than 1 billion of dollars to strengthen the Chinese financial system and has also participated in the giant national semiconductor fund valued in about 100,000 million. In practice, part of China’s commitment to chips, high technology and industrial independence is being financed thanks to smokers. In producing provinces like Yunnan, tobacco taxes represent more than half of the municipal budget. That explains why so many local governments resist even to moderate measures against smoking: restricting consumption means opening huge holes in finances already weakened by the real estate crisis and the economic slowdown. The great world exception. The Chinese case also breaks several global trends. While in many countries vaping has reduced part of traditional consumption, in China the State hardened quickly regulations on electronic cigarettes and limited flavors and points of sale, preventing them from eroding too much of the classic business. There are also no aggressive health warnings like in the West: Chinese packages still show national symbols and discreet messages instead of shocking images about diseases. Although the smoking rate has dropped slightly Because fewer young people are getting into the habit, the total sales volume continues to grow. Partly because China still has hundreds of millions of smokers and partly because tobacco also functions as a social valve in a context of growing economic pressure. A battle that you don’t want to win at all. The result is a deeply contradictory situation. China officially recognizes that tobacco It is a health problem gigantic and maintains public objectives to reduce the number of smokers, but at the same time financially dependent that millions of people continue to buy cigarettes every day. The Chinese political system itself has created a perverse incentive where really combating smoking would involve hitting a fundamental source of income for local governments, banks, strategic investments and even part of the national technological project. That is why China’s big hidden business is not only in the battery factories or rare earths that dominate international headlines. It is also in a state monopoly that sells almost half of cigarettes on the planet and whose revenue helps support much of everything else. Image | SoQ錫濛譙, Steve Evans In Xataka | It’s never too late to quit smoking: the lungs have an incredible capacity to regenerate In Xataka | Fertility rates have plummeted around the world. There is an unnoticed suspect: tobacco
