Commentary
From Evergrande to rising unemployment, blackouts to a rapidly aging population, China is facing an existential reckoning. The “wolf warrior” Chinese diplomats, still busy howling at the world, are understandably worried. Are we witnessing the “great fall” of Beijing?
In the middle of September, I wrote a piece asking if China was in a state of permanent decline. The answer at the time was yes. Almost a month later, the answer still appears to be the same.
As William Pesek, a senior contributor to Forbes, recently noted, China’s Evergrande “default drama” appears to be symptomatic of a deeper malaise gripping the Chinese economy. According to Pesek, the Chinese Communist Party (CCP) has done its very best to hide “surging local government debt.” Now, however, the cat is out of the bag.
Evergrande’s default troubles, in the words of the author, “seem like small embers compared to the $8.2 trillion worth of local government financing vehicles [LGFVs].” Evergrande, currently the world’s most famous (or infamous) property developer, is swimming in a sea of debt, somewhere in the region of $300 billion. If we view Evergrande’s problems through a panoramic lens, we are presented with a much clearer picture. China’s outstanding LGFV debt, according to Pesek, “now amounts to roughly 52% of China’s gross domestic product, topping the official amount of outstanding government debt.” As China’s GDP growth continues to nosedive, Beijing’s hopes of world domination become increasingly unlikely.
The actor Ryan Reynolds once quipped: “Any kind of crisis can be good. It wakes you up." The CCP, no fan of Reynolds’ movie “Deadpool,” is most definitely awake, but one assumes the regime is far from happy. After all, the Chinese people have been sold a lie. For years, the CCP has promised its citizens prosperity, growth, and a future full of triumphs. “Together, we can conquer the world,” the people were told. Words, as we all know, are extremely cheap.
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In a recent Project Syndicate article, Kenneth Rogoff of Harvard University, argued that the biggest challenge facing CCP policymakers involves rebalancing an economy “that has depended for too long on a bloated real estate sector.” Stephen S. Roach of Yale University also voiced some concerns. Chinese leader Xi Jinping’s regulatory clampdown campaign, which is closely linked to the CCP’s socialist idea of “common prosperity,” will only serve to “subdue the entrepreneurial activity that has been key to China’s private-sector dynamism,” according to Roach. Raghuram G. Rajan of the University of Chicago agreed, warning that the CCP’s “lack of political checks and balances“ only serves to heighten ”the risk that Xi’s business crackdown may go too far.”
The three men make a number of valid points. Long before Xi’s disingenuous calls to usher in an era of “common prosperity,” the CCP was busy rearranging the deckchairs as the Titanic filled with water.
Last year, according to reports, around 80 million people in China were out of work. That’s almost a quarter of the United States’ population. For years, China’s official unemployment rate appeared to be relatively stable, but the past year has seen the tally register a significant spike. Today, among the nation’s young workers, the unemployment rate stands at 15.3 percent. As the CCP continues to shoot itself in the foot, the people of China, particularly the younger citizens, pay the heaviest price imaginable. A country that offers little hope to its people also offers little in the way of employment.
Not surprisingly, a lack of work brings a lack of money; a lack of money brings a lack of opportunities, including the chances of finding a spouse. For the country as a whole, a ticking demographic time bomb is set to detonate in the not so distant future. According to recent findings, 18 percent of China’s population is over the age of 60; only 17 percent of the country is under the age of 17. In other words, the country’s death rate looks very likely “to exceed the birth-rate for years to come, unless younger people start having particularly large families,” according to the UK’s Daily Mail. To compound matters, the cost of living in China is increasing rapidly—the signs are ominous. As China becomes increasingly unaffordable, especially for the unemployed, family planning has taken a backseat.
Winston Churchill once said, “Never let a good crisis go to waste.” The CCP, clearly misinterpreting the old adage, has gone to great lengths to create further crises. Unpleasant endings are often associated, either implicitly or explicitly, with darkness. How fitting, then, that China recently found itself struggling with electricity shortages and blackouts. The country desperately needs coal. Australia has plenty of it. There’s just one problem and it’s a sizable one: The diplomatic bridge between Beijing and Canberra has been demolished. Geopolitical tensions with Australia are at an all-time high. Who’s to blame for the breakdown in relations?
The CCP’s belligerence and deceit has backed China into a corner. To be more accurate, the Party has plunged China into a hole that looks increasingly difficult to escape from. If we are witnessing the “great fall” of Beijing, then it’s important to remember who orchestrated the whole affair—the supposed gurus in China’s capital city.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
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