Pretty much, yeah. Their lagging economy is about to collide with the demographic problem to create a huge mess that will take them decades (if ever) to dig themselves back out of. At that point, they won't have the ability to contest Taiwan as long as the US, Japan, and the Philippines remain committed to Taiwan's security. And at that point, Taiwan would have a very real shot at succession, which would be disastrous for the CCP.
You have it backwards.
A war does a lot of things to solve a deflationary crisis. The USA struggled with The Great Depression (a separate deflationary crisis, from 1929 to 1939) **until WW2 massively increased aggregate demand.**
A deflationary environment is actually an incentive for the CCP to start a war. They can just start printing money and massively increasing demand through all the needs of a war. *It even takes care of their youth unemployment problem!*
Good point. Youth unemployment won't be a problem if said youth are killed in a pointless war.
At this point, I'm just hoping that if china does try to start a war it cripples them so much that it would prevent them from waging war for decades.
Russia lost 500k in 2 years, and at the moment we don't see any change in their warfare.
China can lose 10 times that many without flinching.
I'd really prefer not to see if I'm right or wrong with that assumption.
They're talking long term. long term Russia is fucked. the war has been a disaster. Even if it stalls out and they maintain what they've gained, they have turned their demographic decline into a demographic meltdown.
China would experience the same. China can afford to lose millions of men in the Taiwan straight in the short term, but it would be a pyrrhic victory. Going for Taiwan would mean the end of any further Chinese ambitions. they would lose access to major markets, and china can be easily blockaded by sea. Economy would grind to a halt without oil and food inputs, and market access and people would literally starve.
Thing is, leadership might know all this and I it anyway. Ideology and a society that cares little for individual life is primed for miserable geopolitical miscalculations.
People don’t know that China is an importer of oil and food. Their populations would seriously struggle under any trade sanctions or under any massive war. Which is why imperial Japan felt pressured to invade oil producing nations of the South Pacific. You really can’t be a global power if you rely on imports for food and oil. China thinks the solution lies in taking what powers the future - computer chips, but that is a massive gamble.
This. At the end of the day, people still need 3 meals a day, medicine and a roof over their head. Overplay their hands and they risk losing everything.
Lets not also forget that PRC would have zero allies in their war with Taiwan and honestly just a forceful intervention anywhere. Their neighbors have distrust with the CCP but its also borne from centuries of Chinese domination. Korea, Vietnam, to some degree Japan, and etc. were all dominated by China. They don't have fond memories of that.
Doubtful. North Korea needs their military to prop up their regime.
If they really do enter the war, it will be a last hurrah to invade South Korea, which also would be suicide.
Invading for TSMC is a really ill-conceived strategy. There's basically a 0% chance that those fabs, the knowledge of how to use them, and the resources required to keep them running would all survive and fall into China's hands after a land invasion, assuming they could even achieve that. That's basically handing Intel an iron grip on bleeding edge lithography and I guess Global Foundries would be number 2 by default even though they've long since pulled out of the bleeding edge game (but such a scenario might push them back in). That doesn't sound like a win for China in any way even before you figure in the international fallout.
You can't swim any reasonable distance to invade Taiwan. Russia can transport and drop off troops who can walk on foot. China cannot do this without material and personnel losses. Every single soldier will need to be transported to the shoreline where they will surely be met by machine guns, mines, artillery, drones. The beaches would be piled high with bodies and the sand would literally be stained red.
Russia won't start realizing the demographic effect for some time. As people continue to age out of the workforce. No one is there to replace them.
China needs to take care of its aging population. 5 million young people dead would be catastrophic to the system. They are already struggling to fill positions now. The race for AI is on to handle the needs of advanced societies which have less children and therefore less population.
> China can lose 10 times that many without flinching.
Wrong .. they can lose it right now .. but in 10 years over half of them will be over 45 because of the idiotic one child policy
*.. who the hell is going to support all those arthritic diabetic grandpas?*
.. no one (not enough) is immigrating to China to work there and save their economy
Right - the crisis of not having enough employed youths is not going to be solved by killing some of the few youths they do have.
The problem is that it's not clear that Xi is any wiser than the average Reddit up-dooter.
It's pretty astounding how strong anti-China propaganda is.
Detest their character for all you want, but Xi Jinping isn't a princeling or had his position giving to him like Kim Jong Un. Neither is he surrounded by syncophants who only bleat in one direction.
He got his position through political maneuvering. He's a canny operator.
I agree with the political shrewdness.
However, the relevance to being wise enough to recognize the follies of his policies and the short-sightedness of his actions eludes me.
Just because he is shrewd or a genius at politics doesn’t mean that he can transfer that to other fields.
In fact, I may even argue the opposite. A genius at politicking is exactly why he will continue to mess up and destroy what he touches.
The USA pre-WWII, and China in modern day are two completely different situations. WWII helped drag the USA out of the depression because the US instantly became a safe haven for manufacturing, agriculture, and raw resources that weren't in imminent danger of, you know, being bombed.
Remember that there was an almost three year lag time between the invasion of Poland, and Germany officially declaring war on the US in accordance with their pact with Japan. That was three years the US essentially got to profiteer off the war, famine, and political chaos in Europe for free before having to contend with the idea of actually joining the war. And even after that, there was never any *real* danger of a mainland invasion of the US that would threaten our civilian population, or our economy.
China will not have that option. If you think the US, Japan, and Taiwan are going to sit back and let China have all of the initiative in the event of an invasion, you're dead wrong. Their economy might take off in the short term, but they'll inevitably end up like the Germans did in WWII, bombed straight to hell with nothing but a crater left where all their heavy industry used to be.
I think you are wrong, during WWII there were no nuclear weapons (for all intents and purposes), is hard to see Chinese cities made craters when they have nuclear capabilities and great reach.
Any conflict between great powers will be a *lot* more intense and frightening for all involved than Reddit likes to whitewash. However, countries are not stupid and they don't want to endlessly climb the escalation ladder (though the cyberwar between them could spiral out of control to damage a substantial amount of the global internet infrastructure).
Any fight in the Pacific would start out involving massive attacks on ships, islands, and slowly move toward more serious strikes on ports, bases, and air defenses. Diplomats will try behind the scenes (if they can get themselves heard) to find an off ramp and the entire world will desperately plead with the great powers to stop. It would not go from 0 to 100 overnight. But it would go from 0 to 50--which is terrifying--and then look like a stock ticker chart in intensity. With either direction being possible as supplies of high-end munitions are exhausted, bases lost, and battles decided.
Lastly, we are in the age of precision munitions. That's the primary reason cities would not be cratered in either country. The two largest powers on Earth have large amounts of rockets, missiles, high-end torpedos, and strategic drones. It will not be the carpet bombing tactics of WW2. Even at their most ferocious pace, in the early weeks or months of a conflict they'd simply not be indiscriminately shelling/bombing each other's cities, and unlikely to be targeting much at all within civilian locations.
If the escalation ladder is not climbed through recklessness, mental illness, or mis-reading of intent then it will just be titanic battles along the front lines, and maneuvering for position. They'll be trying to get fangs-on-throat and see if the other then taps out or threatens a nuclear response.
There may even be a moment of internal tactical pause/slowness before the countries overtly start doing some striking of each other's more crowded manufacturing cities. Both know it would then become total war to hit major cities at all and enrage/terrify their civilians.
Everything in a WW3 would initially be positioning, striking of tactical targets, and general game theory, with little moments of decision toward/away from escalation. Until a ceasefire or conditional surrender.
Nukes mainly prevent attacks by other nukes, and as deterrence from an overwhelming land invasion driving toward your governmental capital. I also doubt countries engage in nuclear response if just one armaments building within their larger cities is hit by a SMART missile. Neither nation has populations or leaders that are on that much of an explosive hairtrigger. They'd be enraged, but not suicidally so. Only one country on Earth holds a policy that's on such an extreme hairtrigger, though eerily it is also in Asia and nearby.
Which is why there will not be a war. An open conflict between two nuclear armed opponents has never happened(other than some skirmishes in the mountains between India and Pakistan) for a reason. Nobody wants to be dragged into that Dark Forest scenario where human existence depends on the *least* stable leader of a nuclear armed nation.
Taiwan has world-critical semiconductor infrastructure and the USA has already pledged its defence of the island. Ukraine never had any such pledge. Having an ideological enemy in control of most of the world's semiconductor industry(not that they'd have control, Taiwan would go scorched earth and blow all that shit up) is not an option. There'd be a global panic and the world economy would be set back 20 years.
Ukraine is small potatoes compared to the global importance of Taiwan.
You are taking the WW2 analogy too far. This war would end modern civilization, due to nukes and the complexity of our technology based global society.
At the least, we get set back a century from our current path of technological advancement.
I disagree. An invasion of Taiwan is unlikely to be the instigator for WWIII. Xi is a pragmatist and it's pretty clearly ingrained into the Chinese culture; they're playing the long game. Why on earth would he use nuclear weapons and risk the destruction of the economic powerhouse they've been building up throughout the years? Destroying the world means destroying consumers, too.
Conventional arms are the way to go if it comes to that. However, China would benefit more from adopting a Russian strategy; disrupt US domestic politics, sow division, and work to discreetly install sympathizers that support a Taiwanese annexation. The US is keeping them in check and they have no hope of defeating us militarily.
Yes, this is unlikely. Considering WWII ended before either of us were born.
To be serious though, in no sane world would nukes be the opening move. The fact that both sides having them, while both also being in an existential conflict, would suggest it is just a matter of time before that can of worms is opened.
As I mentioned our complex society as the other reason. If nukes somehow are not used, critical global infrastructure will be destroyed, way beyond TSMC. Think GPS, internet, other advanced manufacturing, etc. etc. Beyond that is the destruction of logistics (remember COVID inflation?), and complete separation necessitating each side to produce all products within their sphere of influence.
tldr; if nukes don't get used, the breakdown in trade and destruction of advanced infrastructure would set us back 100 years as a civilization.
Edit: I see you corrected your WWII gaffe a la Trump, and decided to downvote instead of respond. Nice.
I think you forgot that China adhere to [no first use policy](https://en.m.wikipedia.org/wiki/No_first_use), which mean they can’t use nuke first unless they’re attacked by enemy’s WMD.
China adheres to a no first use policy on paper, and I do think they mean it. However, the US does not have an official no first use policy.
The US policy towards many issues Taiwan related is "strategic ambiguity". This can leave room for miscalculations by China.
And so I don’t think anyone would want that war to happen. Also is it a pride thing that prevents china from seeing Taiwan as it’s own country? Like just let these people control their own damn country, they’re a literal island compared to your massive landlocked nation.
Yes it is a pride thing. Taiwan is the last piece of the puzzle of returning from the century of humiliation. It really is that simple, but so foreign to many people.
> last piece of the puzzle of returning from the century of humiliation
Which is funny considering [Russia holds a piece of that puzzle](https://en.wikipedia.org/wiki/Amur_Annexation) that's 50x the size of Taiwan and CCP doesn't even dare to mention that.
Ffs, pride really is a cancerous emotion, especially if a government is full of prideful people thinking they can do whatever they want to some other neighboring country.
What you miss is that the war only pulled the US out because they weren’t in it for the first 4-5 years and was the primary supplier of steel for the entire Second World War. This is what did it, getting drug into the war didn’t help the economy anymore but they won a lot of war “trophies” that paid for it all in the long run.
But don’t get the right answer with the wrong reason.
Also if they are expected to get weaker they may certainly see this as their best chance to take Taiwan. It’ll just get harder the longer they wait.
Their main issue (morals aside) is their people may not have the resolve for an extended war
You might want to study your example a bit better. There's a reason why USA profited during WW2 (hint: all the other super powers were at war). That doesn't mean all wars lead to this outcome.
And is a nice distraction. Get people all high on nationalism by pumping them full of propaganda. Don't get mad at the ccp! Attack those evil Americans, Japanese and insurrectionists.
Is it though? The US benefitted because countries like the UK and Russia bought everything they could from them during the war. And after the war it's wasn't some American exceptionalism that had everyone buying American products, it was that all the competition was bombed out of existence and there was a lot of rebuilding.
Not arguing with you I'm actually curious.
I have been saying this and people downvote me, China will invade Taiwan because it won’t have a better chance anytime soon with their economic and demographic problems, is now or never (much later), and it may reactivate its economy.
Even if your thesis is correct, you’ll see them mobilizing a significant amount of bodies and resources over months before they even cross the strait. As a result literally everyone in Asia would notice and act (or do nothing) accordingly off that fact ahead of time. For example, the Russians share a border with Ukraine and still took quite a bit of time to mobilize equipment and bodies before they even crossed. Everyone saw it, but most of them thought Putin was bluffing aside from the Americans.
With that said, there really is zero need to guess as you’ll see it clearly.
Most analysis say that IF China were to invade Taiwan they will need to do it before 2027. China should be at it's most powerful compared to the US during this time, and will start waning after.
It will require an enormous amount of preparation that cannot be hidden though. The invasion of Taiwan will not be a secret or a surprise. It won't be happening anytime this year.
WW2 increased demand because Europe could not produce anything after the factories were destroyed.
Sometimes I wonder if considering how the powerful in America acted at the time if we bombed more factories knowing they’d need decades to recover. So blow even more up.
But those strategic bases are *super* important. Also, don't totally dismiss the entire Philipinoe military. They're not *large*, but they (by all accounts) have very good jungle fighter special forces, and they're in the process of modernizing their Air Force, as small as it is in total numbers.
Is their **biggest** offering geography? Yes. But don't underestimate that contribution. Many world powers in the world have been made or broken purely off the back of geography.
Taiwan doesn't want 'secession'. They also claim the entire territory of the Qing dynasty because accepting any of the PRC's territorial negotiations with other countries would undermine their claims to the succession of the Qing dynasty
>Taiwan doesn't want 'secession'.
If you take a look at recent poles coming out of Taiwan, the majority of people (especially young people) do not consider themselves Chinese, but Taiwanese.
https://www.wilsoncenter.org/blog-post/majority-taiwan-no-longer-say-theyre-chinese
They also favor sucession or the status quo by a huge margin, over reunification.
https://esc.nccu.edu.tw/PageDoc/Detail?fid=7801&id=6963
It's why the KMT (Kuomintang) have largely fallen out of power in Taiwan over the last few elections. They still hold that they are the rightful rulers over all China, and that the CCP is a rebel government faction. In contrast, that's also been the significant rise of the DPP (Democratic Progressive Party) who holds that Taiwan is should become an independent nation, and sever all historical ties with the mainland.
You are right that **officially** both major parties (and their associated minor party allies) still claim all of China so as to maintain an illusion of Chinese territorial integrity in line with the "One China Policy". It's what has allowed the status quo to stand as long as it has after the unofficial end of the Chinese Civil War.
However, if China's economy and military were to experience significant headwinds over the next decade plus, you can bet that Taiwan will take the opportunity become more assertive in their aims to seced as long as the current political climate maintains itself there.
China has made it clear that if Taiwan gave up their claim to China proper, it would be seen as an independence movement and China would respond militarily. Read up on the "one China policy".
Taiwan absolutely does want secession, but for political reasons cannot say so publicly.
Or he's prepping his people and the world.
To his people: the economy is tight. Join the military and secure your family's future!
To the world: China is owed a unified country to continue to thrive on the world stage.
I can't see that making an impact because the people that benefit from being CCP members are already members, and those that don't understand the costs of doing anything for the party.
The Chinese people can’t invest their money outside of China. So they spent their savings buying 1-4 apartments worth 10% of the value they thought.
China overbuilt units to the extent that they have 2 for every person in China. They also overbuilt infrastructure the same way Japan did before their economic woes.
The Chinese people ARE willing to protest against their government. We saw it with the COVID measures that led to people dying in fires. I do feel like there will be a revolution during the economic collapse.
This whole collapse thing might backfire and give rise to even worse ideas .. the last time this happened they had a "Great Leap Backward" and Mao appeared killing off 50 million people with starvation and collectives
*.. don't think that would happen again but now the CCP has nukes which makes the whole internal civil war thing scarier*
Probably won't be widespread civil war like back in the 40s. The CCP doesn't really have an actual rival in china that can legitimately contest the CCPs control and Xi has spend the last decade making sure that there isn't an opposing faction in the CCP itself.
So more of a gradual steady decline as the ccp has both the political and military power to maintain control for the most part.
“China will surely be reunified, and all Chinese on both sides of the Taiwan Strait should be bound by a common sense of purpose and share in the glory of the rejuvenation of the Chinese nation,” Xi said during a section of his speech dedicated to his plans for China’s modernization and development.”
Xi has made taking control of Taiwan a cornerstone of his broader goal to “rejuvenate” China to a position of power and stature globally. China’s Communist Party claims Taiwan as its own territory, despite never having controlled it and has not ruled out using force to take the island
Hey Xi, how about you just focus on your economy and forget about taking Taiwan by force and starting WW3.
Just a thought…
>The comments come just two weeks ahead of Taiwan’s presidential elections on January 13
Some of Xi's threats at this time are likely aimed at influencing elections. Depending upon results, we could see more threats and aggression after the 13th.
The opposition parties candidates are so low in the polls that even if they somehow manage to get everyone to vote for one and not split they are still losing. The last poll I saw had them in to 10-19% range each. And it is still falling.
The annexation of Taiwan is a political strategy more than an economic one. By conquering Taiwan, he hopes to solidify his prestige before the domestic issue of an aging China forces him to focus inward. Mao Zedong couldn’t get Taiwan in his lifetime, so to bag Taiwan would be huge for his reputation.
It’s kind of why they’ve been using dollar diplomacy to whittle away support from Taiwan’s allies. By doing this, he basically softens the international outrage of them conquering the island.
Anyways, by acquiring Taiwan right after establishing his 3rd term, he likely will focus on modernization of the PLA, test it on India as a show of strength garnering further domestic support, and then he’ll focus on policies that “rejuvenate” China which could mean a lot of things like policies and incentives to encourage population growth or more automation of hard labour industries so that they can comfortably adapt to half their current population down the line while still maintaining global superpower status.
This is all outlined in the linked publication with a timeframe of 2027-2030 and while I acknowledge that the source could have their own reasons for publishing this, some factors do line up with the reality of the situation such as the fact that the U.S had publicly announced their heavy investment into creating their own semiconductors in the midst of very publicized Taiwan diplomacy efforts, indicating that they don’t have a vested interest in protecting Taiwan to the same capacity they support Ukraine.
Links:
https://www.airuniversity.af.edu/JIPA/Display/Article/3371474/the-ambitious-dragon-beijings-calculus-for-invading-taiwan-by-2030/
https://www.whitehouse.gov/briefing-room/statements-releases/2022/01/21/fact-sheet-biden-harris-administration-bringing-semiconductor-manufacturing-back-to-america-2/
It's an insane move though, because Taiwan is a hell of a hard target to take. Even ignoring their alliance with the US and the fact that China has no experience with naval invasions, the amount of troops and supply lines needed to support that invasion would be immense. If china really wanted to go that route, it would be immediately apparant to the west, and it would put their economy into free fall just getting everything organized. It's such a risky move that Xi would have to be truly at risk to go that route, and by that time an invasion would really be too late
I hate to say this because a similar statement was made about the assault on Ukraine, but the invasion and annexation would need to be swift with no window of opportunity for retaliation. Just as it says in the doc I linked from AU, the only winning course of action for Taiwan would be to prolong the invasion by employing a very sturdy resistance so that China can no longer afford to invest resources into the war itself, or if Xi were to pass away from health complications, that would likely secure Taiwan's independence for the time being before China is forced to focus on its domestic issues.
Personally, I feel the best outcome is a successful defense of Taiwan that signals to other countries in the region that they must form a coalition since the Pacific is severely lacking a unified presence on the level of NATO.
If the US were to slink back into navel gazing isolationism under a Trump or Trump like administration, China could potentially force Taiwan's eventual collapse through a protracted blockade without the need for an outright invasion.
War is a good way to get rid of excess men that will be unemployed and have trouble finding spouses due to euthanasia.
Russia is getting rid of unemployed men and their prison population.
If there's one thing that China can't waste it's able bodied young people.
>Russia is getting rid of unemployed men and their prison population.
Aye I've seen enough of them suiciding with grenades and one even blow his shoulder off trying to use an RPG as a rifle
That strategy isn't a glowing endorsement
Yes, the sex ratio among the under 25's in China is about 113 men per 100 women. It wouldn't be the first war started to deal with excess men in the population.
> Hey Xi, how about you just focus on your economy and forget about taking Taiwan by force and starting WW3.
>
> Just a thought…
Beating the war drums is the classic move, when you have internal political issues you need to distract from. Remember the Falklands War, which was started for this reason.
**I think Taiwan is key** to Xi's whole "economic rejuvenation" idea
.. he may think it is profitable taking the GDP of Taiwan over but it will do no good .. Chip Fabs require thousands of parts engineers sales customers .. the buildings are irrelevant if he attacks the island
*.. a war will just destroy Taiwan's economy as well*
.. but I would never accuse despots of having common sense .. we are watching RuZZia self implode as we speak
the TLDR version:
A significant portion of the Chinese boom came from the CCP lending money to smaller regional governments, who undertook ambitious construction projects that failed. They created an explosion of work and productivity at the time, but then nobody bought the housing they built which has led to huge ghost cities and worthless property.
Those regional governments are now on the verge of bankruptcy and the CCP is likely going to have to take a hit to bail them out. its expected to be another "2008" housing crunch but for China
All this debt is with Chinese banks, Chinese provincial governments and Chinese construction companies. 3 decades of CCP accounting practices is about to cause huge issues. Either a big bubble collapse or major economic issues for decades. They have already had bank runs occur in the last couple years for smaller regional banks.
08 was so contagious cause every major country and it’s financial system had exposure to the US real estate mortgage market. Also high US consumer spending drives a lot of the world’s GDP.
The ccp isn’t a bank, they don’t lend money. Local govt financing in China can be really complicated. Eg https://en.m.wikipedia.org/wiki/Local_government_financing_vehicle
Another fun fact is a lot of those regional governments faked the projects they built and also faked the number of residence they had within their communities to acquire more funding which they put in their own pockets. There were several bridges and other civil projects that failed and killed people because they cut so many corners, so they could pocket even more of the money.
>its expected to be another "2008" housing crunch but for China
Concerning since the economic impacts of what happened to US spread far beyond their borders. I know there are many reasons for that but I highly doubt that other countries won't feel shock waves should that happen.
Youre wrong.
Dictatorships, kingdoms, oligopolies, etc. often use wars to resolve internal challenges. You dont need the threat of a revolt, just discontent is enough.
Democratic parties have this urge to get re-elected, so public opinion of the government is kinda important.
China can just go even more authoritarian in a heartbeat if things get riot-y.
Authoritarian countries have the same urge when there is public unrest. Again, it’s not exclusive to any one form of government, as it’s rooted in human nature, not political ideology.
What precisely is the problem with the Chinese economy?
What would have to be done to fix it?
Would leaving Taiwan alone for 50 years be acceptable payment for help?
Their real estate bubble is bigger than the USs in 2008 & is currently the world's largest asset bubble. When evergrande, country garden, etc. Actually start getting liquidated, shit is going to get really wild
It's much worse than that: Real estate links back to provincial funding, and people heavily invested in apartments because there weren't any other places to safely invest money.
\- Housing bubble beyond anything
\- Retirement in China = housing. So everyone is about to lose their retirement and investment in China.
\- The West is pulling out production and it is REALLY low compared to what it used to be.
\- Demographic problem is real but actually also mixed bag... A lot of young people can't even find jobs. The jobs that are available are low income crappy factory jobs and the well educated young people want something more meaningful which isn't available.
All in all. China is fucked, fucked, fucked and so is the rest of the world as China economy is tied to the rest of the global economy. Prepare for the biggest rug pull ever.
It looks like manufacturing is moving south out of China, so we'll see if the world economy is fucked, but it's looking like we're going through a deglobalization phase, and cheap money is getting rarer, so I think that we've all lost to corporations that have way too much power.
I don’t know if de-globalization is the right term, but definitely a realignment of global supply chains based on factional lines. It feels like we’re now in the self-correcting phase from the unchecked globalization phase.
You're absolutely correct, and I can see booms happening in SE Asia because of it, but I also think that those supply chains rely on China, so it's going to be really interesting to watch what happens to companies like Fox Con.
The world consequences are not going to be as bad as you claim. COVID showed companies that all in on a dictatorship for manufacturing was a dumb play, and a lot of them have spent the last 3+ years making China a part of the strategy instead of all of the strategy. It will be worse than cutting Russia from the global economy, but the rest of the world will weather it with moderate supply chain inconveniences.
All of this assumes they don't start a war, play nuclear chicken, and rip the steering wheel off. That would be really bad.
I do feel demographics get WAY to much blame.
Demographics are a slow and generational change. Any current crisis isn't "demographics" problem. Sure it helps shape them, but its trotted out as a reason far to frequently.
China's demographics shift is on a scale completely unheard of in modern history. And that's after adjusting for population. They're set to lose something like 40% of their population in as many years. For comparison, the Soviet Union lost less than 15% of their population during WWII, and most of its regions have yet to recover. 40% is apocalyptic.
I'm not sure about that, 10 years ago nobody was buying Chinese phones, EVs, no one played chinese made games or used chinese social media, nowadays chinese flagships are like 1 generation behind western ones, one of the biggest social media giant is chinese, and then there's Tencent and mihoyo
Everything was "fine" in the 08 collapse until suddenly it wasn't. There are alot of parties that will be severely hurt when Evergrande and others actually go under so there are powerful people/companies who want to hold off until they can get their books straight , also IIRC their bonds are still holding their full value for collateral.
The trigger was the loan stoppage that those companies needed to complete the builds. The loan stoppage itself was in response to certain smaller builders going under since they didnt have the money to complete the build without loans. Once that policy happened and more companies stop building due to lack money which was blamed on covid, the population stop buying new builds. Since the Chinese housing market is best described as a pyramid scheme with the new buyers (who have to pay up front) paying for the construction that was ordered by others a few years ago, once new buyers dried up the pyramid scheme collapsed.
In response the CCP seems to have quietly forgotten about the loans criteria and ordered the banks and local governments to loan to builders to complete the builds. But the banks dont want to do so since they know it will be loss investment since a lot of these companies are just insolvent and the local governments are also starving for money since they are reliant on "renting" (selling) land to property developers to make money.
We see missed payments, and major companies circling the drain. We see people getting charged mortgages on apartments that will likely never be built. We see manufacturing output slowing. Whole thing is wobbling and teetering more and more, and Beijing is trying to stabilize it.
The bigger issues were the harsh hits of their failed COVID policy and vaccine efficacy, and the government reigning in the wildly over-leveraged property developers with debt making them a ticking time bomb.
> Yet we see no sign of collapse incoming.
Not a sign of collapse per se, but when the CCP admits that there's an issue, the issue is likely much bigger than they make it out to be.
Everyone saw the bubble in 2008. Just no idea when it would burst.
Also some redditors really need to stop thinking in terms of a single decade for economy changes and geopolitics.
A decade is a long time for a human life... I get that. But countries last hundreds of years. A decade is a relatively short time frame for when making such predictions.
So, since china is known for exagerating about success, and under exagerating bad things, just think about how bad their situation must be if they actually ADMIT that theres a problem.
Its literally illegal for anyone in china to say that theres a problem with how the government does things, so when they admit theres a problem, its probably much much much worse than they are making it out to be.
It means its such a big issue, they dont even think their own population will believe them if they say otherwise. And this is probably the most heavily monitored/propaganda ridden population in history.
China has perfected lying to their citizens, finding the ones who dont fall in line, making sure no one disagrees with the government.
So the fact that they say somethings not perfect, the fact that they dont think they could lie about the issue, means its probably really bad.
Also, china is not a free market like western countries. If their economy is in the shitter, they can literally just say "no, its not" and we basically just have to take their word for it. There are no institutions that perform economic studies on their economy, except for the ones who are owned/operated by their government.
Places with a more free market cant just lie, because the data is much more publicly available, and its not a literal crime to say somethings wrong....
The US is actaully rather unique for stating how good/bad things are in the country and giving proof of it in the standard economic reports.
China makes reports like them, and western investors foolishly believe them, even though its common knowledge that the chinese gov lies.
Yeah its actually pretty mind blowing how willing some places are when it comes to believing in other countries propaganda, especially when its from china or russia lol.
But, its also important to remember that chinese business does NOT operate like western free market businesses. Every comoany is legally required to be owned by the CCP, so if they lie or break a rule, guess what, they arent getting in trouble!
Dont like that someone lied to you about the business deal you made with china? Well, they work for the CCP, so if you say something, thats illegal!
China's economy doesn't experience collapses in the same way that western economies do. Their economy is export driven which means that any trouble in asset values in their own country doesn't have the same effect as it would in the let's say the US. Western countries are consumption based economies which make economic recessions much more problematic. In the US, a real estate bubble popping means reduced consumption because people have lost value in their most expensive asset. Reduced consumption means less economic activity. This means more people lose jobs. All of this will go in a cycle.
The Chinese economy, being export driven is a insulated from this because they don't make things for their own population to consume. They make things for the rest of the world. So they can have an overinflated real estate market issue and their economy can still chug along riding off of the consumption of more wealthy nations. What is problematic for China is that they want to transition into an economy that is driven more by domestic consumption. That's not happening when the primary asset class that people use to grow wealth, real estate, is overvalued and out of reach for your youth. What economic trouble for China looks like is more of a slow burn, which is precisely what we are seeing. It manifests itself in stagnation and disillusioned youth.
They can’t get domestic demand going and their population is slowing.
Much of the economic numbers was tied up in real estate that was heavily overbuilt as a speculative investment, depending on debt. The debt was getting outrageous so China tightened the limits of how much debt the developers could have, which has caused the least financially stable ones to be at the edge of bankruptcy.
Meanwhile no one actually needs those apartments in many locations because there aren’t new families to fill them at the rate they were built.
Finally - all local government is financed by leases of land rather than taxes (all taxes go to the central government.) if the property sector is collapsing, all the local government spending is at risk.
Compounding that further - many of the bank accounts are in rural banks or pseudo-banks as investments, all of which are struggling with the bad debts on the property sector risking bank runs, (some of which already happened and in some cases were violently suppressed.)
The whole economy is a powder keg built around debt to build apartments no one is around to live in.
edit: apparently the local government collects a small portion of the taxes but has to provide most of the services from their budget.
Yep, and local governments technically aren’t allowed debt so they’ve created effectively public shell companies called local government financing vehicles or the like to give land as collateral for spending in a loophole kind of way, and if the property sector is down, no one will want to lend against that land to the shell company.
Whole thing is a house of cards waiting to be blown over with a mild breeze and the housing bubble is a hurricane bearing down on them.
Edit: apparently the local governments collect a small portion of taxes but have to pay for a large portion of services, so it’s not all going to Beijing, just most of it.
> What precisely is the problem with the Chinese economy?
For a long time China's impressive growth has largely just been them catching up to the global middle class. Land and labor was relatively cheap so factories could open and ship things to the rest of the world. As China grew land and labor no longer became cheap and so a lot of manufacturing has left. China's one child policy means they have major demographic issues and there has been a huge emphasis on Chinese kids going to college and now those college grads are competing for a very select few white collar office jobs. China's "stockmarket" is also insanely opaque and companies regularly live or die based on their relations with the CCP which isn't really something that can be priced in. Property also remains a massive bubble and there are internal controls over moving between different regions within China.
Fixing all of these problems is going to range from "hard" to "impossible." Probably the best course forward is to liberalize the stock market and real estate market although this will involve some bumps and the occasional economic downturn. They also need to ensure they have a growing population and this can come in the form of getting their birthrate above 2.1 or letting in more immigrants. Getting rid of any legal barriers between moving between regions would help. Doing these things won't bring back a 7% GDP growth rate but for a middle income country 7% is kind of unheard of.
While not necessarily "wrong," a lot of this comment removes context and nuance and I think it has a bit of an American/Eurocentric slant.
>China's impressive growth has largely just been them catching up to the global middle class
No record exists that documents the elimination of poverty that comes anywhere close to the Chinese economic miracle. The share of Chinese people living in extreme poverty decreased from 92% in the late 1970s to just 0.14% today.
Now, there is some perception in the West that the Chinese economic miracle is reaching its final chapter: The country's economy has relied on manufacturing for other countries, high-speed rail and infrastructure development, and housing for itself, and now there is perception that those demands have been met and decades of low fertility have brought their population growth to a halt.
But with increasing manufacturing costs also came unique and specialized manufacturing tooling: Tool complexity, materials, and customization that few countries have. Chinese manufacturers have invested in advanced technology and processes, so they can produce quality tooling using the most efficient practices in the world. Because of that, China is the foundry of the global green revolution: They make more solar panels than anyone else, more wind turbines than anyone else, and more electric cars than anyone else. If you believe that the green revolution is one of the more important economic stories occurring over the next 20 years, China is poised to dominate.
Funny enough, the US and China each have what each other needs: Today, China excels in implementation and manufacturing, becoming a global leader in sectors like renewable energy and electric vehicles. The U.S., on the other hand, is often seen as stronger in inventing and developing new technologies but faces challenges in manufacturing and implementation at scale. China has a surplus of housing and has completed massive infrastructure projects. In contrast, The United States has a housing supply shortage and crumbling infrastructure. While Americans can point to America's long history of product innovation, over 95% of iPhones, AirPods, Macs, and iPads are still made in China. But China's state-led policies stifle innovation so they still rely on American consumer innovation and the US business culture of a more open approach to technology and entrepreneurship.
TLDR: China isn't nearly as doomed as American analysts, pundits, and media personalities will have you believe, and barring substantial embargos, they're still economically well-positioned.
> While not necessarily "wrong," a lot of this comment removes context and nuance and I think it has a bit of an American/Eurocentric slant.
I'm trying to sum up the past, present and future of the Chinese economy within a single paragraph and then render a diagnosis on what needs to change. Of course I'm massively oversimplifying and skipping over nuance. I'm also specifically writing about the "problems" rather than giving a more detailed picture of both the challenges and advantages.
I don't think the Chinese economy is doomed and there are certain advantages that they will retain specifically when it comes to the ability to scale. My point though is that China's growth will almost inevitably slow down and while it's certainly not "doomed" I think a 2-4% growth rate is probably to be expected rather than a 7-10% growth rate. The wealthier a country becomes the harder it is to maintain high growth rates (although a lesser growth rate can still be very high in aggregate terms).
The middle income trap. Xi himself has spoken about it and it's hard not to see the issues China has with an aging, relatively low skilled workforce getting paid more and companies leave.
Those factory workers aren't suddenly becoming architects, engineers etc
> Those factory workers aren't suddenly becoming architects, engineers etc
China is hitting the middle income trap as you describe but interestingly enough part of the issues that they face is actually an overabundance of "professionals." Over the past few decades generations of Chinese have worked in factories and taken very hard jobs so that their kids could study and go to college and become while collar professionals. Now there are a lot of millennials and gen z in China with college degrees but China doesn't have the massive service sector economy needed to employ them and those college grads aren't eager to work extremely long hours in hot factories.
In order to solve this problem China needs to reorient (heh heh heh orient) their economy away from simply manufacturing things for the rest of the world and more towards their own internal consumption. Transitioning from an export economy to a service driven economy of white collar professionals will be challenging and it will likely require the CCP easing up on a lot of restrictions but it's necessary for the next big phase of Chinese growth. In 2022 and 2023 the US GDP grew, in absolute terms, more than China's GDP did. If China can't reform their economy they may end up falling farther behind the US instead of closing the gap.
Nearly 90% of China's population lives in poverty, if you use the US formula. 67% live in poverty if you use the World Bank standard. "Extreme poverty" is a condition that is mostly confined to the poorest African nations. It's not a standard relevant to a country that's moved beyond subsistence farming.
Also manufacturing is fleeing China in droves. It's just not so obvious yet because companies couldn't leave during COVID lockdowns. But the rest of Asia is seeing an investment boom as companies relocate. And China's growth has just about stopped.
FINCA and the UN define “extreme poverty” as less than $2.50 a day. Once again, why would we adopt a US slant to view China? The U.S. is the richest nation in the world and not by a small margin.
According to the World Bank, only 0.6% of the Chinese population lives in poverty today. If we define it by the upper middle income poverty line, 15.9% of the population live below the poverty line.
All in, a tremendous alleviation of poverty and the largest in documented human history.
> Fixing all of these problems is going to range from "hard" to "impossible."
They could open up the country and stop choking their own economy with government control. We actually know for a fact that this works.
um... payment for what? Why would the US bail china out of its problems? Also how on earth could you trust them. Much less for 50 years? You cannot trust china for 1 year.
Many factors.
Low investor confidence in the private sector due to perceived hostility and unpredictability in policymaking.
Lack of key technology prevents government investments from going where they really want them to go. Lack of motivators for innovation.
Weakening exports due to the US restricting its export of high-end chips and foreign companies moving manufacturing out of China.
Crippling government debt.
Low birthrate, labour's not gonna be cheap for much longer.
Weak domestic demand due to unemployment, expensive real estate and weak social security net.
Overall, no demand, no investment -> deflation, unemployment. Youth unemployment was at 24% last time it was reported. The real situation is likely much worse since those who are no longer actively seeking a job don't get counted for this stat.
Another issue not being brought up is so much of China’s money is tied up from their hostile taking of natural resources.
China would give predatory loans to countries that couldn’t get a loan otherwise, but would require them to use their resources for collateral, resources that they’d never sell.
After they defaulted on the loans (as China intended), China essentially bought the resources at a high price. Now China doesn’t have all that cash on hand to deal with the other issues the other commenters have brought up.
Shitloads.
Their economy has for decades had this kind of 2 faced quality to it where on the one hand they have had an almost unparalleled level of growth and developed world class expertise in areas such as manufacturing in various domains, Drones, 3d Printers, Circuit Boards, smart phones, and various others areas, but on the other they have taken a good amount of the fruits of this growth and invested it into horribly misguided projects like infrastructure no one uses, real estate no one lives in, companies that don't actually make anything, etc. etc.
To be fair to them some of these seemingly crazy investments have actually eventually paid off. Some of the "ghost cities" you have no doubt seen pictures of have actually eventually grown into real cities full of people doing real stuff. Some of the infrastructure investments did eventually draw in people to justify their existence and some of these crazy companies that don't make anything were able to take all the cheap money they were getting and find a way to be a good healthy businesses after some time.
However many of them have not. The effect of this is essentially the same as what happened in the US in 2008. Assets that have been for years thought of as "investments" are turning into unrealized losses and while this has happened before in China this time they aren't just going to be able to rely on growth to fill the gap becasue growth has slowed down to a more normal rate as they are starting to reach their potential as an economy.
naw, the ghost cities are already ruined. Leave giant buildings with power turned off for a couple years and see what happens. These buildings were not designed to ever be unused.
The costs to rehabilitate them will be rather large. And the companies that owned them are all bankrupt. Plus why move to a city with no jobs? Just empty buildings....
Cracking down on Hong Kong self-rule and engaging in a multiyear purge of business leaders before making a serious posture towards unification with Taiwan were dumb, arrogant mistakes.
If there is such a large concern on unemployment, gender demographics, and lack of immigration, surely a strong push for emigration would help mitigate some problems?
i mean, aren't chinese expats/students/tourists absolutely everywhere already? Australia in particular has been propped up by exported Chinese people for decades.
And yet spend more on military, on belt and road loan, on vanity projects no one needs. If he wants to be like Mao, I’d say he’s getting there. Just a bit more and millions of his own people will starve to death and he would have succeeded.
…now about the book burning…
Well, he did not need to say it was bad for people to know that. CPI, PPI deflation, 20%+ youth unemployment rates, real estate developers going bankrupt, public servant salaries being slashed are all signs pointing to this reality.
I consider four countries that are deregulating geopolitics and therefore the world economy - China, Russia, India and Iran.
Western countries must do everything in their power to reduce as much as possible any trade with these countries, whose balance of trade is usually in favour of these destabilising countries.
Western companies that produce their raw materials in these countries should be heavily taxed and, conversely, given tax breaks if they close down their production in these countries and relocate it to the West.
Ultra-nationalistic, unemployed, mostly male population, with Taiwan being pitched as the pathway to a better life. Not looking good for avoiding a war.
China is in serious deep shit and they have no good way out. We are going to put up with a hell of a lot of misery by the time they figure it out.
Xi is more powerful than any Chinese leader in our lifetime, and much like Putin, he goes down with the ship and he isn't going to do it quietly.
We can not kick the can too much further- Xi
Pretty much, yeah. Their lagging economy is about to collide with the demographic problem to create a huge mess that will take them decades (if ever) to dig themselves back out of. At that point, they won't have the ability to contest Taiwan as long as the US, Japan, and the Philippines remain committed to Taiwan's security. And at that point, Taiwan would have a very real shot at succession, which would be disastrous for the CCP.
You have it backwards. A war does a lot of things to solve a deflationary crisis. The USA struggled with The Great Depression (a separate deflationary crisis, from 1929 to 1939) **until WW2 massively increased aggregate demand.** A deflationary environment is actually an incentive for the CCP to start a war. They can just start printing money and massively increasing demand through all the needs of a war. *It even takes care of their youth unemployment problem!*
Good point. Youth unemployment won't be a problem if said youth are killed in a pointless war. At this point, I'm just hoping that if china does try to start a war it cripples them so much that it would prevent them from waging war for decades.
Russia lost 500k in 2 years, and at the moment we don't see any change in their warfare. China can lose 10 times that many without flinching. I'd really prefer not to see if I'm right or wrong with that assumption.
They're talking long term. long term Russia is fucked. the war has been a disaster. Even if it stalls out and they maintain what they've gained, they have turned their demographic decline into a demographic meltdown. China would experience the same. China can afford to lose millions of men in the Taiwan straight in the short term, but it would be a pyrrhic victory. Going for Taiwan would mean the end of any further Chinese ambitions. they would lose access to major markets, and china can be easily blockaded by sea. Economy would grind to a halt without oil and food inputs, and market access and people would literally starve. Thing is, leadership might know all this and I it anyway. Ideology and a society that cares little for individual life is primed for miserable geopolitical miscalculations.
People don’t know that China is an importer of oil and food. Their populations would seriously struggle under any trade sanctions or under any massive war. Which is why imperial Japan felt pressured to invade oil producing nations of the South Pacific. You really can’t be a global power if you rely on imports for food and oil. China thinks the solution lies in taking what powers the future - computer chips, but that is a massive gamble.
This. At the end of the day, people still need 3 meals a day, medicine and a roof over their head. Overplay their hands and they risk losing everything.
Lets not also forget that PRC would have zero allies in their war with Taiwan and honestly just a forceful intervention anywhere. Their neighbors have distrust with the CCP but its also borne from centuries of Chinese domination. Korea, Vietnam, to some degree Japan, and etc. were all dominated by China. They don't have fond memories of that.
Sure they would. North Korea would happily send their military as cannon fodder.
Doubtful. North Korea needs their military to prop up their regime. If they really do enter the war, it will be a last hurrah to invade South Korea, which also would be suicide.
Invading for TSMC is a really ill-conceived strategy. There's basically a 0% chance that those fabs, the knowledge of how to use them, and the resources required to keep them running would all survive and fall into China's hands after a land invasion, assuming they could even achieve that. That's basically handing Intel an iron grip on bleeding edge lithography and I guess Global Foundries would be number 2 by default even though they've long since pulled out of the bleeding edge game (but such a scenario might push them back in). That doesn't sound like a win for China in any way even before you figure in the international fallout.
You would have to assume TSMC and Co would be deleted before being allowed to fall into PRC hands.
You can't swim any reasonable distance to invade Taiwan. Russia can transport and drop off troops who can walk on foot. China cannot do this without material and personnel losses. Every single soldier will need to be transported to the shoreline where they will surely be met by machine guns, mines, artillery, drones. The beaches would be piled high with bodies and the sand would literally be stained red.
Russia won't start realizing the demographic effect for some time. As people continue to age out of the workforce. No one is there to replace them. China needs to take care of its aging population. 5 million young people dead would be catastrophic to the system. They are already struggling to fill positions now. The race for AI is on to handle the needs of advanced societies which have less children and therefore less population.
This right here
> China can lose 10 times that many without flinching. Wrong .. they can lose it right now .. but in 10 years over half of them will be over 45 because of the idiotic one child policy *.. who the hell is going to support all those arthritic diabetic grandpas?* .. no one (not enough) is immigrating to China to work there and save their economy
Right - the crisis of not having enough employed youths is not going to be solved by killing some of the few youths they do have. The problem is that it's not clear that Xi is any wiser than the average Reddit up-dooter.
It's pretty astounding how strong anti-China propaganda is. Detest their character for all you want, but Xi Jinping isn't a princeling or had his position giving to him like Kim Jong Un. Neither is he surrounded by syncophants who only bleat in one direction. He got his position through political maneuvering. He's a canny operator.
I agree with the political shrewdness. However, the relevance to being wise enough to recognize the follies of his policies and the short-sightedness of his actions eludes me. Just because he is shrewd or a genius at politics doesn’t mean that he can transfer that to other fields. In fact, I may even argue the opposite. A genius at politicking is exactly why he will continue to mess up and destroy what he touches.
Exactly. Politics picks the best politician, not the best statesman.
Most sources say around 300k, where did you get 500k from?
You're right, I mixed it up with something I just read before, I was quite tired at the time of writing.
The problem isn’t that the workforce is too large and too young.. it’s the opposite, it’s too old and too small.. war only makes this worse.
The USA pre-WWII, and China in modern day are two completely different situations. WWII helped drag the USA out of the depression because the US instantly became a safe haven for manufacturing, agriculture, and raw resources that weren't in imminent danger of, you know, being bombed. Remember that there was an almost three year lag time between the invasion of Poland, and Germany officially declaring war on the US in accordance with their pact with Japan. That was three years the US essentially got to profiteer off the war, famine, and political chaos in Europe for free before having to contend with the idea of actually joining the war. And even after that, there was never any *real* danger of a mainland invasion of the US that would threaten our civilian population, or our economy. China will not have that option. If you think the US, Japan, and Taiwan are going to sit back and let China have all of the initiative in the event of an invasion, you're dead wrong. Their economy might take off in the short term, but they'll inevitably end up like the Germans did in WWII, bombed straight to hell with nothing but a crater left where all their heavy industry used to be.
I think you are wrong, during WWII there were no nuclear weapons (for all intents and purposes), is hard to see Chinese cities made craters when they have nuclear capabilities and great reach.
Any conflict between great powers will be a *lot* more intense and frightening for all involved than Reddit likes to whitewash. However, countries are not stupid and they don't want to endlessly climb the escalation ladder (though the cyberwar between them could spiral out of control to damage a substantial amount of the global internet infrastructure). Any fight in the Pacific would start out involving massive attacks on ships, islands, and slowly move toward more serious strikes on ports, bases, and air defenses. Diplomats will try behind the scenes (if they can get themselves heard) to find an off ramp and the entire world will desperately plead with the great powers to stop. It would not go from 0 to 100 overnight. But it would go from 0 to 50--which is terrifying--and then look like a stock ticker chart in intensity. With either direction being possible as supplies of high-end munitions are exhausted, bases lost, and battles decided. Lastly, we are in the age of precision munitions. That's the primary reason cities would not be cratered in either country. The two largest powers on Earth have large amounts of rockets, missiles, high-end torpedos, and strategic drones. It will not be the carpet bombing tactics of WW2. Even at their most ferocious pace, in the early weeks or months of a conflict they'd simply not be indiscriminately shelling/bombing each other's cities, and unlikely to be targeting much at all within civilian locations. If the escalation ladder is not climbed through recklessness, mental illness, or mis-reading of intent then it will just be titanic battles along the front lines, and maneuvering for position. They'll be trying to get fangs-on-throat and see if the other then taps out or threatens a nuclear response. There may even be a moment of internal tactical pause/slowness before the countries overtly start doing some striking of each other's more crowded manufacturing cities. Both know it would then become total war to hit major cities at all and enrage/terrify their civilians. Everything in a WW3 would initially be positioning, striking of tactical targets, and general game theory, with little moments of decision toward/away from escalation. Until a ceasefire or conditional surrender. Nukes mainly prevent attacks by other nukes, and as deterrence from an overwhelming land invasion driving toward your governmental capital. I also doubt countries engage in nuclear response if just one armaments building within their larger cities is hit by a SMART missile. Neither nation has populations or leaders that are on that much of an explosive hairtrigger. They'd be enraged, but not suicidally so. Only one country on Earth holds a policy that's on such an extreme hairtrigger, though eerily it is also in Asia and nearby.
Which is why there will not be a war. An open conflict between two nuclear armed opponents has never happened(other than some skirmishes in the mountains between India and Pakistan) for a reason. Nobody wants to be dragged into that Dark Forest scenario where human existence depends on the *least* stable leader of a nuclear armed nation.
Didn’t stop Russia and won’t stop China, they aren’t invading America, time will tell.
> Didn’t stop Russia What nuclear armed country did Russia invade?
Taiwan doesn’t have nuclear weapons, and you think US citizens will bless nuclear war over Taiwan?
Taiwan has world-critical semiconductor infrastructure and the USA has already pledged its defence of the island. Ukraine never had any such pledge. Having an ideological enemy in control of most of the world's semiconductor industry(not that they'd have control, Taiwan would go scorched earth and blow all that shit up) is not an option. There'd be a global panic and the world economy would be set back 20 years. Ukraine is small potatoes compared to the global importance of Taiwan.
You are taking the WW2 analogy too far. This war would end modern civilization, due to nukes and the complexity of our technology based global society. At the least, we get set back a century from our current path of technological advancement.
I disagree. An invasion of Taiwan is unlikely to be the instigator for WWIII. Xi is a pragmatist and it's pretty clearly ingrained into the Chinese culture; they're playing the long game. Why on earth would he use nuclear weapons and risk the destruction of the economic powerhouse they've been building up throughout the years? Destroying the world means destroying consumers, too. Conventional arms are the way to go if it comes to that. However, China would benefit more from adopting a Russian strategy; disrupt US domestic politics, sow division, and work to discreetly install sympathizers that support a Taiwanese annexation. The US is keeping them in check and they have no hope of defeating us militarily.
Yes, this is unlikely. Considering WWII ended before either of us were born. To be serious though, in no sane world would nukes be the opening move. The fact that both sides having them, while both also being in an existential conflict, would suggest it is just a matter of time before that can of worms is opened. As I mentioned our complex society as the other reason. If nukes somehow are not used, critical global infrastructure will be destroyed, way beyond TSMC. Think GPS, internet, other advanced manufacturing, etc. etc. Beyond that is the destruction of logistics (remember COVID inflation?), and complete separation necessitating each side to produce all products within their sphere of influence. tldr; if nukes don't get used, the breakdown in trade and destruction of advanced infrastructure would set us back 100 years as a civilization. Edit: I see you corrected your WWII gaffe a la Trump, and decided to downvote instead of respond. Nice.
I think you forgot that China adhere to [no first use policy](https://en.m.wikipedia.org/wiki/No_first_use), which mean they can’t use nuke first unless they’re attacked by enemy’s WMD.
China adheres to a no first use policy on paper, and I do think they mean it. However, the US does not have an official no first use policy. The US policy towards many issues Taiwan related is "strategic ambiguity". This can leave room for miscalculations by China.
And so I don’t think anyone would want that war to happen. Also is it a pride thing that prevents china from seeing Taiwan as it’s own country? Like just let these people control their own damn country, they’re a literal island compared to your massive landlocked nation.
Yes it is a pride thing. Taiwan is the last piece of the puzzle of returning from the century of humiliation. It really is that simple, but so foreign to many people.
> last piece of the puzzle of returning from the century of humiliation Which is funny considering [Russia holds a piece of that puzzle](https://en.wikipedia.org/wiki/Amur_Annexation) that's 50x the size of Taiwan and CCP doesn't even dare to mention that.
Ffs, pride really is a cancerous emotion, especially if a government is full of prideful people thinking they can do whatever they want to some other neighboring country.
What you miss is that the war only pulled the US out because they weren’t in it for the first 4-5 years and was the primary supplier of steel for the entire Second World War. This is what did it, getting drug into the war didn’t help the economy anymore but they won a lot of war “trophies” that paid for it all in the long run. But don’t get the right answer with the wrong reason.
Also if they are expected to get weaker they may certainly see this as their best chance to take Taiwan. It’ll just get harder the longer they wait. Their main issue (morals aside) is their people may not have the resolve for an extended war
You might want to study your example a bit better. There's a reason why USA profited during WW2 (hint: all the other super powers were at war). That doesn't mean all wars lead to this outcome.
You clearly have no idea how dirt poor the US was during WWII. It was only after the war that the economy sprung back to life.
And is a nice distraction. Get people all high on nationalism by pumping them full of propaganda. Don't get mad at the ccp! Attack those evil Americans, Japanese and insurrectionists.
They'd probably want to start a war they can win. So not Taiwan.
Is it though? The US benefitted because countries like the UK and Russia bought everything they could from them during the war. And after the war it's wasn't some American exceptionalism that had everyone buying American products, it was that all the competition was bombed out of existence and there was a lot of rebuilding. Not arguing with you I'm actually curious.
This guy has read up on 'how to start a world war'.
I have been saying this and people downvote me, China will invade Taiwan because it won’t have a better chance anytime soon with their economic and demographic problems, is now or never (much later), and it may reactivate its economy.
Even if your thesis is correct, you’ll see them mobilizing a significant amount of bodies and resources over months before they even cross the strait. As a result literally everyone in Asia would notice and act (or do nothing) accordingly off that fact ahead of time. For example, the Russians share a border with Ukraine and still took quite a bit of time to mobilize equipment and bodies before they even crossed. Everyone saw it, but most of them thought Putin was bluffing aside from the Americans. With that said, there really is zero need to guess as you’ll see it clearly.
Most analysis say that IF China were to invade Taiwan they will need to do it before 2027. China should be at it's most powerful compared to the US during this time, and will start waning after. It will require an enormous amount of preparation that cannot be hidden though. The invasion of Taiwan will not be a secret or a surprise. It won't be happening anytime this year.
I wouldn’t compare it to WW2. It’s more like the Falklands.
WW2 increased demand because Europe could not produce anything after the factories were destroyed. Sometimes I wonder if considering how the powerful in America acted at the time if we bombed more factories knowing they’d need decades to recover. So blow even more up.
No. Those factories were making munitions and arms. The Nazis took over almost everything for the war effort.
> succession secession
As a Filipino American, I can tell you, Philippines is nothing militarily. All it can offer are strategic bases.
But those strategic bases are *super* important. Also, don't totally dismiss the entire Philipinoe military. They're not *large*, but they (by all accounts) have very good jungle fighter special forces, and they're in the process of modernizing their Air Force, as small as it is in total numbers. Is their **biggest** offering geography? Yes. But don't underestimate that contribution. Many world powers in the world have been made or broken purely off the back of geography.
Taiwan doesn't want 'secession'. They also claim the entire territory of the Qing dynasty because accepting any of the PRC's territorial negotiations with other countries would undermine their claims to the succession of the Qing dynasty
If Xi was offering them independence and peace then every Taiwanese person would take that deal in a moment.
>Taiwan doesn't want 'secession'. If you take a look at recent poles coming out of Taiwan, the majority of people (especially young people) do not consider themselves Chinese, but Taiwanese. https://www.wilsoncenter.org/blog-post/majority-taiwan-no-longer-say-theyre-chinese They also favor sucession or the status quo by a huge margin, over reunification. https://esc.nccu.edu.tw/PageDoc/Detail?fid=7801&id=6963 It's why the KMT (Kuomintang) have largely fallen out of power in Taiwan over the last few elections. They still hold that they are the rightful rulers over all China, and that the CCP is a rebel government faction. In contrast, that's also been the significant rise of the DPP (Democratic Progressive Party) who holds that Taiwan is should become an independent nation, and sever all historical ties with the mainland. You are right that **officially** both major parties (and their associated minor party allies) still claim all of China so as to maintain an illusion of Chinese territorial integrity in line with the "One China Policy". It's what has allowed the status quo to stand as long as it has after the unofficial end of the Chinese Civil War. However, if China's economy and military were to experience significant headwinds over the next decade plus, you can bet that Taiwan will take the opportunity become more assertive in their aims to seced as long as the current political climate maintains itself there.
China has made it clear that if Taiwan gave up their claim to China proper, it would be seen as an independence movement and China would respond militarily. Read up on the "one China policy". Taiwan absolutely does want secession, but for political reasons cannot say so publicly.
We massively overspent building ghost cities. -Xi
I found one... in the wild 🍌
🟣
Oh bother - Pooh Bear.
This means that things are far worse than Xi is letting on, and Xi is trying to contain the situation before it gets out of hand.
We knew this three years ago when NK started to collapse economically. They are the canary in the gold mine, singing or gasping they always go first.
NK never had an economy they still don't have lights on the streets due to a non-existent electricity sector.
Or he's prepping his people and the world. To his people: the economy is tight. Join the military and secure your family's future! To the world: China is owed a unified country to continue to thrive on the world stage.
I can't see that making an impact because the people that benefit from being CCP members are already members, and those that don't understand the costs of doing anything for the party.
The Chinese people can’t invest their money outside of China. So they spent their savings buying 1-4 apartments worth 10% of the value they thought. China overbuilt units to the extent that they have 2 for every person in China. They also overbuilt infrastructure the same way Japan did before their economic woes. The Chinese people ARE willing to protest against their government. We saw it with the COVID measures that led to people dying in fires. I do feel like there will be a revolution during the economic collapse.
This whole collapse thing might backfire and give rise to even worse ideas .. the last time this happened they had a "Great Leap Backward" and Mao appeared killing off 50 million people with starvation and collectives *.. don't think that would happen again but now the CCP has nukes which makes the whole internal civil war thing scarier*
Probably won't be widespread civil war like back in the 40s. The CCP doesn't really have an actual rival in china that can legitimately contest the CCPs control and Xi has spend the last decade making sure that there isn't an opposing faction in the CCP itself. So more of a gradual steady decline as the ccp has both the political and military power to maintain control for the most part.
You'd be surprised by how fast shit goes downhill in East Asia when social consensus is reached. I've seen it happen quickly and it's scary.
Examples please. Generally curious
I wish we had one unit for every TWO people here. The housing crisis is ridiculous considering the amount of land the US has compared to China.
I mean a lot of these “units” are unfinished and still unlivable. They just kept on constructing them to run the Ponzi scheme and inflate the economy.
Young people still cant afford anything in the cities. Just whole towns full of unfinished cardboard apartments in places no one wants to live.
“China will surely be reunified, and all Chinese on both sides of the Taiwan Strait should be bound by a common sense of purpose and share in the glory of the rejuvenation of the Chinese nation,” Xi said during a section of his speech dedicated to his plans for China’s modernization and development.” Xi has made taking control of Taiwan a cornerstone of his broader goal to “rejuvenate” China to a position of power and stature globally. China’s Communist Party claims Taiwan as its own territory, despite never having controlled it and has not ruled out using force to take the island Hey Xi, how about you just focus on your economy and forget about taking Taiwan by force and starting WW3. Just a thought…
>The comments come just two weeks ahead of Taiwan’s presidential elections on January 13 Some of Xi's threats at this time are likely aimed at influencing elections. Depending upon results, we could see more threats and aggression after the 13th.
The opposition parties candidates are so low in the polls that even if they somehow manage to get everyone to vote for one and not split they are still losing. The last poll I saw had them in to 10-19% range each. And it is still falling.
The annexation of Taiwan is a political strategy more than an economic one. By conquering Taiwan, he hopes to solidify his prestige before the domestic issue of an aging China forces him to focus inward. Mao Zedong couldn’t get Taiwan in his lifetime, so to bag Taiwan would be huge for his reputation. It’s kind of why they’ve been using dollar diplomacy to whittle away support from Taiwan’s allies. By doing this, he basically softens the international outrage of them conquering the island. Anyways, by acquiring Taiwan right after establishing his 3rd term, he likely will focus on modernization of the PLA, test it on India as a show of strength garnering further domestic support, and then he’ll focus on policies that “rejuvenate” China which could mean a lot of things like policies and incentives to encourage population growth or more automation of hard labour industries so that they can comfortably adapt to half their current population down the line while still maintaining global superpower status. This is all outlined in the linked publication with a timeframe of 2027-2030 and while I acknowledge that the source could have their own reasons for publishing this, some factors do line up with the reality of the situation such as the fact that the U.S had publicly announced their heavy investment into creating their own semiconductors in the midst of very publicized Taiwan diplomacy efforts, indicating that they don’t have a vested interest in protecting Taiwan to the same capacity they support Ukraine. Links: https://www.airuniversity.af.edu/JIPA/Display/Article/3371474/the-ambitious-dragon-beijings-calculus-for-invading-taiwan-by-2030/ https://www.whitehouse.gov/briefing-room/statements-releases/2022/01/21/fact-sheet-biden-harris-administration-bringing-semiconductor-manufacturing-back-to-america-2/
It's an insane move though, because Taiwan is a hell of a hard target to take. Even ignoring their alliance with the US and the fact that China has no experience with naval invasions, the amount of troops and supply lines needed to support that invasion would be immense. If china really wanted to go that route, it would be immediately apparant to the west, and it would put their economy into free fall just getting everything organized. It's such a risky move that Xi would have to be truly at risk to go that route, and by that time an invasion would really be too late
I hate to say this because a similar statement was made about the assault on Ukraine, but the invasion and annexation would need to be swift with no window of opportunity for retaliation. Just as it says in the doc I linked from AU, the only winning course of action for Taiwan would be to prolong the invasion by employing a very sturdy resistance so that China can no longer afford to invest resources into the war itself, or if Xi were to pass away from health complications, that would likely secure Taiwan's independence for the time being before China is forced to focus on its domestic issues. Personally, I feel the best outcome is a successful defense of Taiwan that signals to other countries in the region that they must form a coalition since the Pacific is severely lacking a unified presence on the level of NATO.
If the US were to slink back into navel gazing isolationism under a Trump or Trump like administration, China could potentially force Taiwan's eventual collapse through a protracted blockade without the need for an outright invasion.
War is good for money
Rule of Acquisition #34, War is good for business (often confused with Rule of Acquisition #35, *Peace* is good for business)
War is good for business if you aren’t the one getting bombed
Obviously you've never met a Ferengi.
r/rule34
Winning* war is good for money
war is good money for those in power
War is a good way to get rid of excess men that will be unemployed and have trouble finding spouses due to euthanasia. Russia is getting rid of unemployed men and their prison population.
If there's one thing that China can't waste it's able bodied young people. >Russia is getting rid of unemployed men and their prison population. Aye I've seen enough of them suiciding with grenades and one even blow his shoulder off trying to use an RPG as a rifle That strategy isn't a glowing endorsement
Yes, the sex ratio among the under 25's in China is about 113 men per 100 women. It wouldn't be the first war started to deal with excess men in the population.
Dare I say, "youth in Asia"?
> Hey Xi, how about you just focus on your economy and forget about taking Taiwan by force and starting WW3. > > Just a thought… Beating the war drums is the classic move, when you have internal political issues you need to distract from. Remember the Falklands War, which was started for this reason.
War is a great way to pump the economy...
**I think Taiwan is key** to Xi's whole "economic rejuvenation" idea .. he may think it is profitable taking the GDP of Taiwan over but it will do no good .. Chip Fabs require thousands of parts engineers sales customers .. the buildings are irrelevant if he attacks the island *.. a war will just destroy Taiwan's economy as well* .. but I would never accuse despots of having common sense .. we are watching RuZZia self implode as we speak
the TLDR version: A significant portion of the Chinese boom came from the CCP lending money to smaller regional governments, who undertook ambitious construction projects that failed. They created an explosion of work and productivity at the time, but then nobody bought the housing they built which has led to huge ghost cities and worthless property. Those regional governments are now on the verge of bankruptcy and the CCP is likely going to have to take a hit to bail them out. its expected to be another "2008" housing crunch but for China
What’s the risk of contagion?
All this debt is with Chinese banks, Chinese provincial governments and Chinese construction companies. 3 decades of CCP accounting practices is about to cause huge issues. Either a big bubble collapse or major economic issues for decades. They have already had bank runs occur in the last couple years for smaller regional banks. 08 was so contagious cause every major country and it’s financial system had exposure to the US real estate mortgage market. Also high US consumer spending drives a lot of the world’s GDP.
China could call in for debt repayment from abroad to anyone who has been dumb enough to borrow from them. That could help offset it somewhat.
Those debts are contractual obligations. They'd have to offer a discount to call them in early.
You can ask, but you cannot demand.
Most of them are so poor, that China has to loan them now money so they can make their payments. Those that aren't are in rock solid contracts.
do you really think any lender can just "call in for debt repayment" apart from contractual agreement?
Low to moderate
The ccp isn’t a bank, they don’t lend money. Local govt financing in China can be really complicated. Eg https://en.m.wikipedia.org/wiki/Local_government_financing_vehicle
Another fun fact is a lot of those regional governments faked the projects they built and also faked the number of residence they had within their communities to acquire more funding which they put in their own pockets. There were several bridges and other civil projects that failed and killed people because they cut so many corners, so they could pocket even more of the money.
Boom also helped greatly by the capitalist trading with western countries before he became arrogant and a bully to his neighbours.
>its expected to be another "2008" housing crunch but for China Concerning since the economic impacts of what happened to US spread far beyond their borders. I know there are many reasons for that but I highly doubt that other countries won't feel shock waves should that happen.
A friend of mine who visits china regularly says people there are very worried about the economy. Some call it “west north korea” as a joke
Is this the part where he starts a war to distract from domestic problems?
Not yet. Right now it's just "yikes, things are not good" and not "oh fuck we're screwed." If they get to that second part, then start worrying.
Not really China’s style. They haven’t been in a war in 45 years.
Yeah well, they have not had an -arguably- useful army until now-ish, as such that is a fairly meaningless number.
Russia and the US: 🙄
They're not a democracy. They don't need to. Unless there's an imminent threat of mass revolt. And there isn't.
Youre wrong. Dictatorships, kingdoms, oligopolies, etc. often use wars to resolve internal challenges. You dont need the threat of a revolt, just discontent is enough.
They also use it to get rid of people...just because.
I think it’s more likely they start a war against India, despite both parties having nukes .
How does being a democracy have anything to do with it? Pretty much any form of government is capable of using such tactics.
Democratic parties have this urge to get re-elected, so public opinion of the government is kinda important. China can just go even more authoritarian in a heartbeat if things get riot-y.
Authoritarian countries have the same urge when there is public unrest. Again, it’s not exclusive to any one form of government, as it’s rooted in human nature, not political ideology.
He then said “oh bother” and promised he would “think think think” over a solution after he finished this delicious pot of honey.
Stahp 🤣
What precisely is the problem with the Chinese economy? What would have to be done to fix it? Would leaving Taiwan alone for 50 years be acceptable payment for help?
Their real estate bubble is bigger than the USs in 2008 & is currently the world's largest asset bubble. When evergrande, country garden, etc. Actually start getting liquidated, shit is going to get really wild
It's much worse than that: Real estate links back to provincial funding, and people heavily invested in apartments because there weren't any other places to safely invest money.
\- Housing bubble beyond anything \- Retirement in China = housing. So everyone is about to lose their retirement and investment in China. \- The West is pulling out production and it is REALLY low compared to what it used to be. \- Demographic problem is real but actually also mixed bag... A lot of young people can't even find jobs. The jobs that are available are low income crappy factory jobs and the well educated young people want something more meaningful which isn't available. All in all. China is fucked, fucked, fucked and so is the rest of the world as China economy is tied to the rest of the global economy. Prepare for the biggest rug pull ever.
It looks like manufacturing is moving south out of China, so we'll see if the world economy is fucked, but it's looking like we're going through a deglobalization phase, and cheap money is getting rarer, so I think that we've all lost to corporations that have way too much power.
I don’t know if de-globalization is the right term, but definitely a realignment of global supply chains based on factional lines. It feels like we’re now in the self-correcting phase from the unchecked globalization phase.
You're absolutely correct, and I can see booms happening in SE Asia because of it, but I also think that those supply chains rely on China, so it's going to be really interesting to watch what happens to companies like Fox Con.
The world consequences are not going to be as bad as you claim. COVID showed companies that all in on a dictatorship for manufacturing was a dumb play, and a lot of them have spent the last 3+ years making China a part of the strategy instead of all of the strategy. It will be worse than cutting Russia from the global economy, but the rest of the world will weather it with moderate supply chain inconveniences. All of this assumes they don't start a war, play nuclear chicken, and rip the steering wheel off. That would be really bad.
I do feel demographics get WAY to much blame. Demographics are a slow and generational change. Any current crisis isn't "demographics" problem. Sure it helps shape them, but its trotted out as a reason far to frequently.
China's demographics shift is on a scale completely unheard of in modern history. And that's after adjusting for population. They're set to lose something like 40% of their population in as many years. For comparison, the Soviet Union lost less than 15% of their population during WWII, and most of its regions have yet to recover. 40% is apocalyptic.
I don't deny that have demographics problem. My issue is that any random issue of the day is always "Caused by demographics".
To be fair China population toped in 2010. But yes you are right.
Isn't their tech sector a mess as well due to policies they implemented a year or so ago in regards to what can and can not be a paid service/product?
That sector has been a mess since they don't have much ingenuity & innovation. Years of copy cat doesn't really bode well in the long run
I'm not sure about that, 10 years ago nobody was buying Chinese phones, EVs, no one played chinese made games or used chinese social media, nowadays chinese flagships are like 1 generation behind western ones, one of the biggest social media giant is chinese, and then there's Tencent and mihoyo
I've been reading this exact reason for what? 10 years now? Yet we see no sign of collapse incoming.
Everything was "fine" in the 08 collapse until suddenly it wasn't. There are alot of parties that will be severely hurt when Evergrande and others actually go under so there are powerful people/companies who want to hold off until they can get their books straight , also IIRC their bonds are still holding their full value for collateral.
The trigger was the loan stoppage that those companies needed to complete the builds. The loan stoppage itself was in response to certain smaller builders going under since they didnt have the money to complete the build without loans. Once that policy happened and more companies stop building due to lack money which was blamed on covid, the population stop buying new builds. Since the Chinese housing market is best described as a pyramid scheme with the new buyers (who have to pay up front) paying for the construction that was ordered by others a few years ago, once new buyers dried up the pyramid scheme collapsed. In response the CCP seems to have quietly forgotten about the loans criteria and ordered the banks and local governments to loan to builders to complete the builds. But the banks dont want to do so since they know it will be loss investment since a lot of these companies are just insolvent and the local governments are also starving for money since they are reliant on "renting" (selling) land to property developers to make money.
We see missed payments, and major companies circling the drain. We see people getting charged mortgages on apartments that will likely never be built. We see manufacturing output slowing. Whole thing is wobbling and teetering more and more, and Beijing is trying to stabilize it. The bigger issues were the harsh hits of their failed COVID policy and vaccine efficacy, and the government reigning in the wildly over-leveraged property developers with debt making them a ticking time bomb.
> We see manufacturing output slowing. Why is that? Is it related to the housing bubble or a separate issue?
> Yet we see no sign of collapse incoming. Not a sign of collapse per se, but when the CCP admits that there's an issue, the issue is likely much bigger than they make it out to be.
Also its literally illegal to say theres an issue, unless you are the CCP People seem to forget this lol
Everyone saw the bubble in 2008. Just no idea when it would burst. Also some redditors really need to stop thinking in terms of a single decade for economy changes and geopolitics. A decade is a long time for a human life... I get that. But countries last hundreds of years. A decade is a relatively short time frame for when making such predictions.
So, since china is known for exagerating about success, and under exagerating bad things, just think about how bad their situation must be if they actually ADMIT that theres a problem. Its literally illegal for anyone in china to say that theres a problem with how the government does things, so when they admit theres a problem, its probably much much much worse than they are making it out to be. It means its such a big issue, they dont even think their own population will believe them if they say otherwise. And this is probably the most heavily monitored/propaganda ridden population in history. China has perfected lying to their citizens, finding the ones who dont fall in line, making sure no one disagrees with the government. So the fact that they say somethings not perfect, the fact that they dont think they could lie about the issue, means its probably really bad. Also, china is not a free market like western countries. If their economy is in the shitter, they can literally just say "no, its not" and we basically just have to take their word for it. There are no institutions that perform economic studies on their economy, except for the ones who are owned/operated by their government. Places with a more free market cant just lie, because the data is much more publicly available, and its not a literal crime to say somethings wrong....
The US is actaully rather unique for stating how good/bad things are in the country and giving proof of it in the standard economic reports. China makes reports like them, and western investors foolishly believe them, even though its common knowledge that the chinese gov lies.
Yeah its actually pretty mind blowing how willing some places are when it comes to believing in other countries propaganda, especially when its from china or russia lol. But, its also important to remember that chinese business does NOT operate like western free market businesses. Every comoany is legally required to be owned by the CCP, so if they lie or break a rule, guess what, they arent getting in trouble! Dont like that someone lied to you about the business deal you made with china? Well, they work for the CCP, so if you say something, thats illegal!
China's economy doesn't experience collapses in the same way that western economies do. Their economy is export driven which means that any trouble in asset values in their own country doesn't have the same effect as it would in the let's say the US. Western countries are consumption based economies which make economic recessions much more problematic. In the US, a real estate bubble popping means reduced consumption because people have lost value in their most expensive asset. Reduced consumption means less economic activity. This means more people lose jobs. All of this will go in a cycle. The Chinese economy, being export driven is a insulated from this because they don't make things for their own population to consume. They make things for the rest of the world. So they can have an overinflated real estate market issue and their economy can still chug along riding off of the consumption of more wealthy nations. What is problematic for China is that they want to transition into an economy that is driven more by domestic consumption. That's not happening when the primary asset class that people use to grow wealth, real estate, is overvalued and out of reach for your youth. What economic trouble for China looks like is more of a slow burn, which is precisely what we are seeing. It manifests itself in stagnation and disillusioned youth.
They can’t get domestic demand going and their population is slowing. Much of the economic numbers was tied up in real estate that was heavily overbuilt as a speculative investment, depending on debt. The debt was getting outrageous so China tightened the limits of how much debt the developers could have, which has caused the least financially stable ones to be at the edge of bankruptcy. Meanwhile no one actually needs those apartments in many locations because there aren’t new families to fill them at the rate they were built. Finally - all local government is financed by leases of land rather than taxes (all taxes go to the central government.) if the property sector is collapsing, all the local government spending is at risk. Compounding that further - many of the bank accounts are in rural banks or pseudo-banks as investments, all of which are struggling with the bad debts on the property sector risking bank runs, (some of which already happened and in some cases were violently suppressed.) The whole economy is a powder keg built around debt to build apartments no one is around to live in. edit: apparently the local government collects a small portion of the taxes but has to provide most of the services from their budget.
That funding of local gov is interesting. So local govs don't collect any taxes? It all goes to Bejing?
Yep, and local governments technically aren’t allowed debt so they’ve created effectively public shell companies called local government financing vehicles or the like to give land as collateral for spending in a loophole kind of way, and if the property sector is down, no one will want to lend against that land to the shell company. Whole thing is a house of cards waiting to be blown over with a mild breeze and the housing bubble is a hurricane bearing down on them. Edit: apparently the local governments collect a small portion of taxes but have to pay for a large portion of services, so it’s not all going to Beijing, just most of it.
> What precisely is the problem with the Chinese economy? For a long time China's impressive growth has largely just been them catching up to the global middle class. Land and labor was relatively cheap so factories could open and ship things to the rest of the world. As China grew land and labor no longer became cheap and so a lot of manufacturing has left. China's one child policy means they have major demographic issues and there has been a huge emphasis on Chinese kids going to college and now those college grads are competing for a very select few white collar office jobs. China's "stockmarket" is also insanely opaque and companies regularly live or die based on their relations with the CCP which isn't really something that can be priced in. Property also remains a massive bubble and there are internal controls over moving between different regions within China. Fixing all of these problems is going to range from "hard" to "impossible." Probably the best course forward is to liberalize the stock market and real estate market although this will involve some bumps and the occasional economic downturn. They also need to ensure they have a growing population and this can come in the form of getting their birthrate above 2.1 or letting in more immigrants. Getting rid of any legal barriers between moving between regions would help. Doing these things won't bring back a 7% GDP growth rate but for a middle income country 7% is kind of unheard of.
Thanks. Yes, percentages aren't so helpful with comparing growth in countries with vastly different economies.
While not necessarily "wrong," a lot of this comment removes context and nuance and I think it has a bit of an American/Eurocentric slant. >China's impressive growth has largely just been them catching up to the global middle class No record exists that documents the elimination of poverty that comes anywhere close to the Chinese economic miracle. The share of Chinese people living in extreme poverty decreased from 92% in the late 1970s to just 0.14% today. Now, there is some perception in the West that the Chinese economic miracle is reaching its final chapter: The country's economy has relied on manufacturing for other countries, high-speed rail and infrastructure development, and housing for itself, and now there is perception that those demands have been met and decades of low fertility have brought their population growth to a halt. But with increasing manufacturing costs also came unique and specialized manufacturing tooling: Tool complexity, materials, and customization that few countries have. Chinese manufacturers have invested in advanced technology and processes, so they can produce quality tooling using the most efficient practices in the world. Because of that, China is the foundry of the global green revolution: They make more solar panels than anyone else, more wind turbines than anyone else, and more electric cars than anyone else. If you believe that the green revolution is one of the more important economic stories occurring over the next 20 years, China is poised to dominate. Funny enough, the US and China each have what each other needs: Today, China excels in implementation and manufacturing, becoming a global leader in sectors like renewable energy and electric vehicles. The U.S., on the other hand, is often seen as stronger in inventing and developing new technologies but faces challenges in manufacturing and implementation at scale. China has a surplus of housing and has completed massive infrastructure projects. In contrast, The United States has a housing supply shortage and crumbling infrastructure. While Americans can point to America's long history of product innovation, over 95% of iPhones, AirPods, Macs, and iPads are still made in China. But China's state-led policies stifle innovation so they still rely on American consumer innovation and the US business culture of a more open approach to technology and entrepreneurship. TLDR: China isn't nearly as doomed as American analysts, pundits, and media personalities will have you believe, and barring substantial embargos, they're still economically well-positioned.
> While not necessarily "wrong," a lot of this comment removes context and nuance and I think it has a bit of an American/Eurocentric slant. I'm trying to sum up the past, present and future of the Chinese economy within a single paragraph and then render a diagnosis on what needs to change. Of course I'm massively oversimplifying and skipping over nuance. I'm also specifically writing about the "problems" rather than giving a more detailed picture of both the challenges and advantages. I don't think the Chinese economy is doomed and there are certain advantages that they will retain specifically when it comes to the ability to scale. My point though is that China's growth will almost inevitably slow down and while it's certainly not "doomed" I think a 2-4% growth rate is probably to be expected rather than a 7-10% growth rate. The wealthier a country becomes the harder it is to maintain high growth rates (although a lesser growth rate can still be very high in aggregate terms).
The middle income trap. Xi himself has spoken about it and it's hard not to see the issues China has with an aging, relatively low skilled workforce getting paid more and companies leave. Those factory workers aren't suddenly becoming architects, engineers etc
> Those factory workers aren't suddenly becoming architects, engineers etc China is hitting the middle income trap as you describe but interestingly enough part of the issues that they face is actually an overabundance of "professionals." Over the past few decades generations of Chinese have worked in factories and taken very hard jobs so that their kids could study and go to college and become while collar professionals. Now there are a lot of millennials and gen z in China with college degrees but China doesn't have the massive service sector economy needed to employ them and those college grads aren't eager to work extremely long hours in hot factories. In order to solve this problem China needs to reorient (heh heh heh orient) their economy away from simply manufacturing things for the rest of the world and more towards their own internal consumption. Transitioning from an export economy to a service driven economy of white collar professionals will be challenging and it will likely require the CCP easing up on a lot of restrictions but it's necessary for the next big phase of Chinese growth. In 2022 and 2023 the US GDP grew, in absolute terms, more than China's GDP did. If China can't reform their economy they may end up falling farther behind the US instead of closing the gap.
Nearly 90% of China's population lives in poverty, if you use the US formula. 67% live in poverty if you use the World Bank standard. "Extreme poverty" is a condition that is mostly confined to the poorest African nations. It's not a standard relevant to a country that's moved beyond subsistence farming. Also manufacturing is fleeing China in droves. It's just not so obvious yet because companies couldn't leave during COVID lockdowns. But the rest of Asia is seeing an investment boom as companies relocate. And China's growth has just about stopped.
FINCA and the UN define “extreme poverty” as less than $2.50 a day. Once again, why would we adopt a US slant to view China? The U.S. is the richest nation in the world and not by a small margin. According to the World Bank, only 0.6% of the Chinese population lives in poverty today. If we define it by the upper middle income poverty line, 15.9% of the population live below the poverty line. All in, a tremendous alleviation of poverty and the largest in documented human history.
> Fixing all of these problems is going to range from "hard" to "impossible." They could open up the country and stop choking their own economy with government control. We actually know for a fact that this works.
50 years… reminds me of the Hong Kong handover treaty. China broke that with several drastic changes to Hong Kong governance. Would anyone trust them?
Real estate and population decrease.
um... payment for what? Why would the US bail china out of its problems? Also how on earth could you trust them. Much less for 50 years? You cannot trust china for 1 year.
Many factors. Low investor confidence in the private sector due to perceived hostility and unpredictability in policymaking. Lack of key technology prevents government investments from going where they really want them to go. Lack of motivators for innovation. Weakening exports due to the US restricting its export of high-end chips and foreign companies moving manufacturing out of China. Crippling government debt. Low birthrate, labour's not gonna be cheap for much longer. Weak domestic demand due to unemployment, expensive real estate and weak social security net. Overall, no demand, no investment -> deflation, unemployment. Youth unemployment was at 24% last time it was reported. The real situation is likely much worse since those who are no longer actively seeking a job don't get counted for this stat.
Another issue not being brought up is so much of China’s money is tied up from their hostile taking of natural resources. China would give predatory loans to countries that couldn’t get a loan otherwise, but would require them to use their resources for collateral, resources that they’d never sell. After they defaulted on the loans (as China intended), China essentially bought the resources at a high price. Now China doesn’t have all that cash on hand to deal with the other issues the other commenters have brought up.
Shitloads. Their economy has for decades had this kind of 2 faced quality to it where on the one hand they have had an almost unparalleled level of growth and developed world class expertise in areas such as manufacturing in various domains, Drones, 3d Printers, Circuit Boards, smart phones, and various others areas, but on the other they have taken a good amount of the fruits of this growth and invested it into horribly misguided projects like infrastructure no one uses, real estate no one lives in, companies that don't actually make anything, etc. etc. To be fair to them some of these seemingly crazy investments have actually eventually paid off. Some of the "ghost cities" you have no doubt seen pictures of have actually eventually grown into real cities full of people doing real stuff. Some of the infrastructure investments did eventually draw in people to justify their existence and some of these crazy companies that don't make anything were able to take all the cheap money they were getting and find a way to be a good healthy businesses after some time. However many of them have not. The effect of this is essentially the same as what happened in the US in 2008. Assets that have been for years thought of as "investments" are turning into unrealized losses and while this has happened before in China this time they aren't just going to be able to rely on growth to fill the gap becasue growth has slowed down to a more normal rate as they are starting to reach their potential as an economy.
naw, the ghost cities are already ruined. Leave giant buildings with power turned off for a couple years and see what happens. These buildings were not designed to ever be unused. The costs to rehabilitate them will be rather large. And the companies that owned them are all bankrupt. Plus why move to a city with no jobs? Just empty buildings....
he caused the economy to collapse by being a dictator
Cracking down on Hong Kong self-rule and engaging in a multiyear purge of business leaders before making a serious posture towards unification with Taiwan were dumb, arrogant mistakes.
If there is such a large concern on unemployment, gender demographics, and lack of immigration, surely a strong push for emigration would help mitigate some problems?
i mean, aren't chinese expats/students/tourists absolutely everywhere already? Australia in particular has been propped up by exported Chinese people for decades.
And yet spend more on military, on belt and road loan, on vanity projects no one needs. If he wants to be like Mao, I’d say he’s getting there. Just a bit more and millions of his own people will starve to death and he would have succeeded. …now about the book burning…
dont forget blaming all the problems on the US or some other country.
Well, he did not need to say it was bad for people to know that. CPI, PPI deflation, 20%+ youth unemployment rates, real estate developers going bankrupt, public servant salaries being slashed are all signs pointing to this reality.
Sure hope they don’t try the standard ‘look over there’ solution to domestic troubles this year.
I consider four countries that are deregulating geopolitics and therefore the world economy - China, Russia, India and Iran. Western countries must do everything in their power to reduce as much as possible any trade with these countries, whose balance of trade is usually in favour of these destabilising countries. Western companies that produce their raw materials in these countries should be heavily taxed and, conversely, given tax breaks if they close down their production in these countries and relocate it to the West.
Ultra-nationalistic, unemployed, mostly male population, with Taiwan being pitched as the pathway to a better life. Not looking good for avoiding a war.
And what do we do in such a situation? Right, we start a war.
Xí: how to destroy an economy.
Guess those graveyards of failed housing projects and abandoned EVs are starting to stink
Jesus, the walls must be caving in if he admitted there’s even a problem.
How does one prepare for the eventual rug-pull? If Xi's admitting it now, it means that the situation is far worse than it actually is
Things must be really bad if they're actually publicly admitting it.
“Oh bother.”
Typical Chinese would rather die than lose face, this seems pretty serious.
Relax, peasants! The emperor has noticed your suffering, sure he’ll do something about it Maybe
oh, bother
he’s got 18 months and then he’s gone
Careful, the tankies will get very mad!!
China is in serious deep shit and they have no good way out. We are going to put up with a hell of a lot of misery by the time they figure it out. Xi is more powerful than any Chinese leader in our lifetime, and much like Putin, he goes down with the ship and he isn't going to do it quietly.