Just How Stable Is China Right Now?

[Kamaji]

Just How Stable Is China Right Now?

By JIM GERAGHTY
July 15, 2022

This is more Jimmy Quinn’s territory, but I look at recent headlines like . . .

* “Chinese Homebuyers Across 22 Cities Refuse to Pay Mortgages”

* “China tries to stem growing anger over frozen bank deposits”

* “Xi Visits Xinjiang Region After Extended Absence from Public Eye”

* “China’s economy shrinks 2.6% during virus shutdowns”

* “China Is Giving Off Strong Lehman Brothers Vibes”

* “China will fare the worst if stagflation strikes, says S&P Global Ratings”

* “China Sees Most Covid Cases Since May as Lockdowns Spread”

* “Shanghai fears new lockdown as millions test for Covid amid sweltering heat”

. . . and wonder just how stable the Chinese economy and Chinese government are these days. The Chinese government, like all authoritarian regimes, requires a narrative of universal competence and wisdom in its leaders, which means the regime can never openly admit a mistake. Everything is always going according to the five-year plan, the state is always right, the leaders are always all-knowing and all-seeing, and any corruption, failures or incompetence that gets exposed is always isolated incidents involving rogue low-level employees.

*  *  *

A few days ago, former Pentagon strategist Elbridge Colby shared an unnerving thread laying out why he is “more and more alarmed about a PRC invasion of Taiwan.” You should read the whole thing, but the short version is that Colby sees the motive, means, and opportunity aligning for China. But the window of opportunity may be closing in the long term, as U.S. defense upgrades come on line and an anti-China defensive alliance takes hold in the Pacific.

It is possible that economic and domestic instability make Xi Jinping less likely to pull the trigger on an invasion of Taiwan; Russia’s invasion of Ukraine is demonstrating that the conquest of a long-coveted neighbor can be more difficult — a lot bloodier and messier and more geopolitically isolating — than expected. If your country is facing a tall stack of worsening problems, a major war against a foe determined to resist is likely to just make everything worse.

*  *  *

Source:  https://www.nationalreview.com/corner/just-how-stable-is-china-right-now/

[Free Vulcan]

I thought for a long time that China was ultimately going to swamp us and basically take over.

Now looking at the mismanagement of their economy, among other things, they almost look like they are imploding.

Which in some ways makes them scarier. I worried desperation may make them do even dumber things than they already are.

[libertybele]

I thought for a long time that China was ultimately going to swamp us and basically take over.

Now looking at the mismanagement of their economy, among other things, they almost look like they are imploding.

Which in some ways makes them scarier. I worried desperation may make them do even dumber things than they already are.

Except, consider that they are no longer buying our debt (treasuries, etc.) but they do own a lot of our corporations or at least our corporations have their headquarters over there and a lot of our meds come from China.

Mismanagement of their economy?  Like the U.S. economy is being so well managed right now.

China is still hoping and pushing for their currency to be the dominant currency over the U.S.  COVID ring a bell?

[Free Vulcan]

Except, consider that they are no longer buying our debt (treasuries, etc.) but they do own a lot of our corporations or at least our corporations have their headquarters over there and a lot of our meds come from China.

Mismanagement of their economy?  Like the U.S. economy is being so well managed right now.

China is still hoping and pushing for their currency to be the dominant currency over the U.S.  COVID ring a bell?

As bad as we are, they are worse. They really look like they set up a house of cards.

I can't imagine two economic superpowers faltering at the same time. Beyond scary.

[bilo]

I thought for a long time that China was ultimately going to swamp us and basically take over.

Now looking at the mismanagement of their economy, among other things, they almost look like they are imploding.

Which in some ways makes them scarier. I worried desperation may make them do even dumber things than they already are.

I think the aggression towards Taiwan is as much about internal problems as it is about wanting Taiwan. China has a lot of problems in addition to their real estate collapse. They can't feed their population. They import at leads 85% of their energy. They are the fastest aging population in the world because of their one child policy. Taiwan creates a nationalistic support for the CCP and reduces internal uprisings.

[The_Reader_David]

It would be very good were the CCP to suddenly lose the Mandate of Heaven.  Such thing have happened before in Chinese history, and beyond their theoretical fealty to Marxist irrelegion, the fact that uprisings against previous Chinese regimes have often had a religious character is the reason the CCP ruthless persecutes any expression of religion that is not somehow tamed by its leaders expressing loyalty to the regime (be it house churches, Falung Gong, Tibetan Buddhism, or Islam among the Uyghurs).

[catfish1957]

As bad as we are, they are worse. They really look like they set up a house of cards.

I can't imagine two economic superpowers faltering at the same time. Beyond scary.

Big difference is we are ultra leveraged in debt, they are just broke.

I'd prefer the latter.

[Free Vulcan]

Big difference is we are ultra leveraged in debt, they are just broke.

I'd prefer the latter.

I have read their debt is equivalent to ours, maybe more. It surprised me. Certainly don't see them in the same light now.

Being they are so much more financially closed, for them it's more of how long till the cracks blow out the dam.

[Kamaji]

I would not trust anything the Chinese government said publicly about its own sovereign debt.  Furthermore, given the much more porous relationship between the Chinese government and ostensibly "private" enterprises, much of what passes as nominally "private" debt is almost certainly more along the lines of government debt.

[catfish1957]

I have read their debt is equivalent to ours, maybe more. It surprised me. Certainly don't see them in the same light now.

Being they are so much more financially closed, for them it's more of how long till the cracks blow out the dam.

Chicom's Debt to GDP ratio was 73% per the IMF.  Sustainable if you have a manufacturing economy to back it.

Ours is 136%. With a stagnant service economy. 

[catfish1957]

I would not trust anything the Chinese government said publicly about its own sovereign debt.  Furthermore, given the much more porous relationship between the Chinese government and ostensibly "private" enterprises, much of what passes as nominally "private" debt is almost certainly more along the lines of government debt.

Yeah, it can be suspect, but there would be more internal crumbling, if they were truly cooking the books.  Not that it isn't happening, but if it is, its been masterfully hidden from the international economic community.

[Free Vulcan]

Chicom's Debt to GDP ratio was 73% per the IMF.  Sustainable if you have a manufacturing economy to back it.

Ours is 136%. With a stagnant service economy.

What I read was that a good percentage of their debt has been classified as business and local, not State, essentially in order to hide it.

Added together it puts them up where we are. Problem is there is no 'business' or 'local' in China, it's all the State.

When I read that it readjusted my view of them.

[bilo]

Big difference is we are ultra leveraged in debt, they are just broke.

I'd prefer the latter.

As deglobalization accelerates the USA is in a great position regardless of our debt. In the end the debt will be monetized by inflation and growth of our economy.

China is in a very unstable position because their economy is dependent on exporting goods. Our number one trading partner is on our southern border. Also, because of the Wuhan virus international companies are reassessing the stability of their supply chains and the USA is seeing manufacturing returning as well as being established in friendlier countries.

[libertybele]

As bad as we are, they are worse. They really look like they set up a house of cards.

I can't imagine two economic superpowers faltering at the same time. Beyond scary.

I don't see that as impossible, but likely probable. The U.S. fails and so does most of the world.

[catfish1957]

What I read was that a good percentage of their debt has been classified as business and local, not State, essentially in order to hide it.

Added together it puts them up where we are. Problem is there is no 'business' or 'local' in China, it's all the State.

When I read that it readjusted my view of them.

No doubt, the Chicoms are masters of stealth in how their economy is clicking.

But still, my gut feeling tells me that there is a 95% chance theirs is still more much more sound than ours.  The shear difference they boast a robust manufacturing base.  We used to have that, and were the envy of the world.  That's gone now.

We have had 35 years of criminal DC political squandering of it, for proof. Wer're not only broke.  The credit card limit has been reached.

[Kamaji]

Yeah, it can be suspect, but there would be more internal crumbling, if they were truly cooking the books.  Not that it isn't happening, but if it is, its been masterfully hidden from the international economic community.

A lot of the debt is "hidden" as ostensibly private debt, but which the government ends up being on the hook for - sort of like Fannie and Freddie, the GSEs whose debt was not supposed to be guaranteed by the federal government, until it was (2008) - and thus formal statements of what is, and what is not, Chinese government debt, even if passed on by the IMF, are highly suspect since the Chinese government is also "not on the hook" for their own GSE-type debt.

And there are cracks beginning to form; it's just that because the Chinese government is an authoritarian government with a lot more control over the economy and the major economic players - if the government decides that a purported billionaire is no longer entitled to his wealth, it magically disappears, or he loses control over it, quite quickly - and so they can paper over the faults for a much longer period of time.  That, of course, usually ends up making the inevitable collapse worse than it might have otherwise been.