The CCP’s Arms Race With the US Will Lead to Its Collapse: Analysts

By Jiang Yuchan
Jiang Yuchan
Jiang Yuchan
September 21, 2021 Updated: September 21, 2021

News Analysis

Recently, the Chinese Communist Party (CCP) has been curbing Big Tech companies as well as entertainment celebrities, fining them or forcing them to donate towards what it calls “common prosperity.”

The Chinese edition of The Epoch Times has recently invited China experts to analyze the real meaning behind the CCP’s moves, and they believe this wave of the purge serves the CCP’s military spending purposes, repeating what Moscow had done before the Soviet Union collapsed—preparing resources for the arms race with the United States.

The CCP’s head Xi Jinping called for a “common prosperity campaign” on Aug. 17 in an economic planning meeting to address rising inequality in China.

The day after Xi’s speech, China’s tech giant Tencent promised to donate $7.7 billion. On Aug. 24, Pinduoduo, an internet commerce company, said it would donate $374 million to start with and $1.5 billion in total in the future. Back in April this year, China’s e-commerce giant Alibaba Group was hit with a fine of $2.8 billion for anti-competitive tactics.

In August, Chinese tax authorities fined Zheng Shuang, a Chinese entertainment star and former brand ambassador for Italian luxury brand Prada, $46 million for tax evasion.

In an interview with the Chinese edition of The Epoch Times in September, Taiwan Society of International Law deputy secretary-general Ting-hui Lin said the CCP needs a huge amount of capital to support its military confrontation with the United States. The CCP’s crackdown on the private sector reveals that the CCP is in financial crisis, Lin said.

“The central government needs money to reserve its economic strength to confront the U.S., even if not in the arms race, but also in other confrontations, which need money to support,” he said.

The CCP’s Huge Military Spending in the Arms Race with the US

Lin pointed out that one of the reasons for the Soviet Union’s collapse was its arms race with the United States. The Soviet Union had to increase its military spending significantly, which in turn increased its government deficit and caused severe poverty in the country, said Lin.

Lin noted that Xi believes China will not collapse like the Soviet Union due to a financial crisis, because China has a large consumer market that attracts foreign investment.

“But to confront the U.S. in the long term inevitably needs huge capital,” he said said. The CCP is already experiencing a financial crisis and a decline economically, which is why the CCP is grabbing wealth from those rich Chinese people, according to Lin.

“The CCP’s recent crackdown on the wealthy Chinese is to prepare financially for its military buildup and the coming confrontation with the U.S.,” the legal expert said in the interview.

The CCP’s military spending in 2020 was $252 billion, according to a report (pdf) by Stockholm International Peace Research Institute, a Stockholm-based military think tank. This is the 26th year in a row that the CCP has been increasing its military spending, and China is the second-largest military spender in the world, the report reveals.

Epoch Times Photo
Chinese J-15 fighter jets are launching from the deck of the Liaoning aircraft carrier during military drills in the Yellow Sea, off China’s east coast on Dec. 23, 2016.  (STR/AFP via Getty Images)

Besides domestic wealth snatching, Lin noted that the CCP has been using China’s market to attract foreign capital. One of the CCP’s methods is to entice foreign manufacturers to set up plants in China. Tesla, for example, entered China as it is interested in the Chinese market, Lin said.

Another way of attracting foreign capital is through China’s stock exchanges. “At the same time, by setting up the Beijing Stock Exchange, the CCP expects to attract more foreign investors to China,” he said.

Xi announced on Sept. 2, 2021, a third stock market in Beijing to help small- and medium-sized companies raise capital.

The two existing stock exchanges in mainland China are the Shanghai Stock Exchange, established in Nov. 1990, and the Shenzhen Stock Exchange in Dec. 1990.

Lin said that, despite the CCP’s efforts to increase its financial strength, its recent crackdown on Big Tech and entertainment celebrities is a sign of economic decline in China due to the pandemic. That’s why the CCP now can only raid the wealth of these rich Chinese people “to prepare for the next confrontation [with the United States] and the expansion of its armaments,” according to Lin.

Antonio Graceffo, an economics professor and China economic analyst, noted that ING Bank has adjusted its third-quarter China growth prediction downward to 4.5 percent from 5.5 percent.

The CCP’s Focus on Naval Strength in the China-US Confrontation

Yujen Kuo, professor of the Institute of China and Asia-Pacific Studies of Taiwan National Sun Yat-sen University, told The Epoch Times in a recent interview that the CCP has been building up its navy and sea power. One example given by Kuo is that the CCP began to build artificial islands in the South China Sea as early as 2013.

Kuo noted that many experts and U.S. government observers at that time thought that these man-made islands were of little military significance. “Now, when we look back, it can be seen that the CCP has already had military plans [in the South China Sea],” said Kuo, “and the CCP’s purpose is clear: to compete with the U.S. in military power.”

His analysis of the CCP’s focus is backed up by a U.S. defense report.

The U.S. Office of the Secretary of Defense states in its “2020 China Military Power Report” (pdf) that the CCP “has the largest navy in the world, with an overall battleforce of approximately 350 ships and submarines including over 130 major surface combatants” as of 2020. The U.S. navy, in comparison, has a battle force of 293 ships as of early 2020, the report writes.

James E. Fanell, a retired U.S. Navy captain and a former director of intelligence and information operations for the U.S. Pacific Fleet, wrote in a commentary for The Epoch Times in May: “The gap between the size of the PLAN [People’s Liberation Army Navy] and the U.S. Navy is expected to continue to grow throughout the next two decades, by the end of which the size of the PLAN will be some 550 warships and submarines.”

The CCP Is Bound to Fall due to its Internal Problems

Wang Hao, writer and expert on international politics and economy, said in a recent interview with The Epoch Times that the CCP’s domestic issues will be the main cause of the fall of the CCP.

Wang was born in Shanghai, China, and holds a DPhil in International Relations from St Antony’s College of the University of Oxford. He now lives in Taiwan.

Wang said that the huge wealth gaps between the rich and poor, and among different areas in China, are serious problems for the CCP. “It also has its ethnic issues and cultural issues, which are more serious than the Soviet Union’s problems,” Wang said.

Epoch Times Photo
Farmer Liu Qingyou at his residence in Baojing County, in central China’s Hunan Province on Jan. 12, 2021. (Noel Celis/AFP via Getty Images)

Commenting on Xi’s call for “common prosperity,” Wang said, “The CCP’s common prosperity campaign is going to lead to common poverty.”

Wang argued that the CCP is worried that the development of its private sector—representing capitalism—will be a threat to its socialist rule. That is why the CCP is eager to redistribute the wealth and resources of the rich private business owners and entrepreneurs by forcing them to donate their wealth. When the private sector is damaged, China’s economy is going to fall apart, Wang said.

Lin noted that the CCP has posed new restrictions on Chinese people depositing and withdrawing their own money, trial implementation of which began on Sept. 1 in Zhengjiang and Hebei provinces and Shenzhen City.

According to the new regulations, individuals depositing $15,500 and institutions depositing $77,500 must accept an investigation by the bank. The bank will register the details of the depositor and the withdrawer, and the depositor also needs to inform the source and whereabouts of the deposit. The bank may not allow the depositor to collect the money if the depositor refuses to cooperate, Taiwan newspaper Liberty Times reported on Aug. 21.

“All this added up together sends one signal: the central government needs money,” Lin said. “The CCP needs to store up enough financial strength to confront the U.S. in the arms race and in other competitions.”

Lin said that the China-U.S. confrontation has made it impossible for China to go back on a peaceful path with the United States. On top of that, the pandemic worsens the CCP’s relations with other western countries. “To maintain its rule and shift Chinese people’s attention, the CCP finds that the best way is to go back to struggle—socialism fighting capitalism, and grassroots poor people fighting wealthy people. The CCP takes this opportunity to plunder wealth to continue with its confrontation,” Lin said.

“Once the CCP goes on this path, there is no return for it. Wealthy Chinese people and enterprises will no longer work hard on improving their operations, and foreign investors will leave China,” Lin said.

“When the wealth is gone, the CCP is bound to fall apart, just like the Soviet Union,” Lin said.

Jiang Yuchan