A whole raft of economic bad news is coming out of China right now. I'm sure you've read something of it in the mainstream news media, but a lot of Americans haven't realized how deeply the rot has set in. Try any of these headlines for more information.
- China shuts factories, rations electricity as heat wave stifles economy
- China’s bursting housing bubble summed up in a viral video, as official tells citizens to ‘Buy one property, then a second. Bought a second? Buy a third, and fourth’
- China unexpectedly cuts 2 key [interest] rates, withdraws cash from banking system
- A storm on the horizon
An Internet search will produce many more such articles.
The problem for the Chinese Communist Party (CCP) is that it dare not lose control of the internal situation. If people come to believe that the CCP doesn't actually care about them at all, but only seeks to control and exploit them for the Party's own interests, it may actually lose control of parts of the country; and if that happens, where it might end is anybody's guess. It's the CCP's nightmare at any time, but particularly now, as that country's economy continues to transition from massive exports (now imperiled by Covid-19, supply chain snafus, collapse in demand as nations spend scarce foreign reserves on food rather than consumer products, etc.) to trying to generate massive internal consumption, to create an internal market for what it used to export. Hence the call (linked above) to buy more than one property - something like 80% of China's consumer economy is tied to property, and if that falters, immense sums of money loaned to developers and builders will fall into default, imperiling the country's entire banking system.
The CCP can undoubtedly crack down on dissent, and is already doing so in many ways; but the stresses on Chinese society, made much worse by uncompromising, zero-tolerance Covid-19 lockdowns, are growing dangerous. That's why the Chinese government is whipping up such xenophobia and anger among its people about Pelosi's visit to Taiwant, and goosing it even higher after the follow-up visit by more congressional representatives.
It's one of the oldest tricks in the political playbook - dating well back to the earliest centuries of recorded history - for a ruler to whip up domestic sentiment against some external enemy, so that instead of overthrowing him (usually him, occasionally her), the people will expend their anger and energy against the designated opponent du jour. China is no different. Whether the CCP defines the enemy as "the bourgeoisie", or "the Four Olds", or capitalism, or Taiwan, or America, is basically irrelevant. It needs a focal point for the people's unhappiness, and thanks to its almost total control of the news media and the Internet, it can use anything or anyone as the target for their anger.
If things go off the rails in China, I fully expect it to launch an invasion of Taiwan to divert its people's attention away from internal problems and towards an outside enemy. That might happen very soon - much sooner than people think. After all, the Chinese know full well that President Biden is incapable of running this country, and they've bribed and suborned sufficient senior politicians in both mainstream US political parties to be confident they can delay or divert any US response until it's too late to make a difference. They've done their political calculations long ago, and I'm sure their propaganda and disinformation campaigns are as well prepared as are their military strategy.
The real problem, one that most people are ignoring, is that Japan has all but committed to helping Taiwan defend itself. It's facing Chinese territorial demands of its own over the Senkaku Islands, and it knows that if China "gets away with it" over Taiwan, those islands must soon follow. South Korea is also a potential player: it must surely realize that if China can destroy and/or absorb Taiwan, it can do the same to the entire Korean peninsula. An invasion of Taiwan might run headlong into such potential alliances - the last thing China wants or needs. For more on the international situation, try these articles:
- China's Taiwan aggression triggers fears of wider security crisis in Asia
- Beijing’s Taiwan Aggression Has Backfired in Tokyo
- What Would Japan Do If China Takes Taiwan, Lands Tanks and Marines on Okinawa?
Taiwan is a real flashpoint right now. If I were a foreigner there, I'd be leaving as soon as I could buy a plane ticket; and if I were an investor, I'd be very cautious about committing more funds to the island until the situation clarifies. Furthermore, if war breaks out there, it's going to disrupt world trade in a big way, bringing severe economic consequences to almost every nation. Where that might end is anybody's guess.
Keep your eyes and ears open and your powder dry, friends.