Only a half-dozen years ago, many so-called experts saw China as the up-and-coming economic superpower and Xi Jinping as its indispensable man. American and European political and business leaders hailed China’s role in the global economy.
Today, the vulnerability of China’s intertwined social, industrial and monetary systems is clearly visible. Xi’s failure to live up to expectations is also evident.
A Record of Many Errors
Today, Xi Jinping finds himself in a regime with myriad errors and problems.
Perhaps the Chinese Communist Party’s (CCP) most infamous failure is the “One Child Policy.” Xi can creditably deny some of the responsibility for the disaster. This policy, which dates back to the fifties and was codified in 1979, was ostensibly intended to limit “overpopulation.”
While Xi did not start the program, he did not discontinue the policy until 2016, four years after he came to power. The resulting population implosion is a ticking time bomb that will have grave consequences in the future.
On the other hand, another well-known social disaster can be laid firmly at Xi’s doorstep. His handling of the COVID crisis brought incalculable numbers of deaths and untold misery, both in China and worldwide. His government both denied any responsibility for the pandemic and, simultaneously, took draconian measures—reportedly including welding suspected victims’ apartment doors shut to prevent the spread of the disease.
Nonetheless, Xi often expounds on the need for Chinese citizens to be loyal to the CCP, even though its policies backfire in ways that affect the entire population.
A Glut of Housing
Children and COVID are only the beginning. Other disasters result from Xi’s statist economic policies. China is in the throes of an unimaginable real estate crisis.
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According to The Wall Street Journal, China has up to ninety million unoccupied housing units, many in massive unfinished buildings.
For comparison purposes, the vacancies would be about two-thirds of the TOTAL number of housing units in the United States, as determined by the U.S. Census Bureau in 2020. The entire population of Brazil could fit in the empty units, suddenly vacant and unsalable.
This disaster occurred because the national and local governments encouraged the construction of homes when the Chinese economy exploded during the decade after 2010. These large-scale housing projects were seen as signs of a coming wave of prosperity under Xi’s wise leadership. Banks made massive loans to developers, who, in turn, sold those units while still under construction.
Now, millions of people have their meager life savings tied up in unfinished and unsalable apartments in massive, unoccupied buildings.
State-Sponsored Industrial Espionage
Another symbol of the future that never arrived is the Cadillac Lyriq, a luxury electric sport-utility vehicle. China figured heavily in the decision to design and build it. In 2022, General Motors Chief Financial Officer Paul Jacobson exuded confidence. “We think that’s going to be a really, really strong vehicle for us in China and, I think, a good test of things to come.”
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Today, according to The Wall Street Journal, “the Lyriq is barely a blip on G.M.’s sales charts in China, and the automaker’s market share in the country has shriveled. After years of consistent profits in China, G.M. swung to a loss in the first half of this year.” Ford, Toyota and Volkswagen can tell similar tales of woe.
The issue goes well beyond automobiles. China forced non-Chinese firms into “joint ventures” with Chinese companies, all of which were owned or controlled by the government.
Those agreements forced companies to share their research with the Chinese. The firms, dazzled by hopes of access to China’s billions of consumers, readily agreed.
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The Chinese companies promptly stole the information. Now, they use it to make lower-priced competing products. Having invested billions of dollars and decades of technical development, foreign companies find themselves on the outside looking in. As companies reduce their workforces, many Chinese employees also suffer.
A Common and Dangerous Subterfuge
China’s economic woes could well become a national security issue for America.
When authoritarian governments lose popularity at home, they often seek solutions by creating crises abroad. China has an adversary seemingly tailor-made for this purpose: Taiwan.
If Xi decides that he could bolster his popularity and simultaneously deal a devastating blow to U.S. prestige, the temptation might be too much for him to resist.
In that scenario, China’s economic problems could easily land on America’s doorstep.
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Updated November 15, 2024.