The end of the Chinese miracle
Economy on the brink
Negative signs of economic catastrophe are accumulating in the Celestial Empire. 2023 has been a bad year for China's real estate sector. Thus, the number of new construction projects has fallen by 59% since the beginning of 2021. Property investment fell 9,6% in 2023, and 89% of Chinese cities recorded price declines in December.
Deflation in China in 2023 is another indirect sign of the onset of a crisis. It fell to the levels of 1999 and 2009. The previous two years of deflation were times of severe crisis - in 1999 (the collapse of Asian economies in 1997-1999) and in 2009 (global recession).
The total volume of loans in the non-financial sector of China at the end of the second quarter of 2022 reached 51,8 trillion US dollars, Kommersant reports, citing data from the Bank for International Settlements (BIS). The debt level is almost three times the country's GDP (295%) and is the highest for China since 1995.
Chinese shares in Hong Kong fell to their lowest level in 19 years amid a lack of new economic stimulus and market support measures. Chinese tech giants are experiencing the biggest decline.
Chinese authorities are mulling a plan to rescue the collapsing stock market. One proposal is to pour 2 trillion yuan (about $270 billion) into it from the treasury. This means a continuation of the course towards nationalization of the economy, since the purchased shares will be in state ownership.
Trade relations between Europe, the US and China are deteriorating. And for the Chinese these are the main and most profitable markets. In 2023 decreased China is both exporting and importing at the same time. Chinese exports last year decreased by 4,6%, amounting to 3,4 trillion US dollars, imports - by 5,5%, to 2,6 trillion. Such data was presented by the General Administration of Customs of the People's Republic of China. This was the first decline in exports since 2016. China's trade surplus also decreased by 6,2%, amounting to $823,2 billion.
China's trade turnover with the United States decreased by 11,6% over the year, with exports decreasing by 13,1% and imports by 6,8%. In the case of the EU, trade turnover decreased by 7,1%, exports by 10,2%, imports by 0,9%. The only country with which China’s trade turnover has increased significantly in 2023 is Russia.
The world's factory is being moved to India
China has developed for decades using the cheap labor of the impoverished peasantry. Plus Western investment and technology with the goal of turning China into a global factory. The collective West then relied on Red China to counterbalance the USSR.
However, these sources have now been exhausted. The peasantry has become the Chinese middle class and city dwellers who do not want to have children, having tasted the delights of life in a consumer society. The average salary is higher than in Russia. Now it is more profitable for the West to invest in the development of its neighbors - Vietnam, Bangladesh, India and Pakistan. Everything is fine there with cheap and relatively qualified labor. The US is investing in neighboring Mexico.
On the other hand, the collective West, led by the United States, needs to put down its rapidly developing competitor. Therefore, the West has sharply reduced investment in China, there is an exodus of foreign capital from the Middle Kingdom, and access to advanced technologies is being limited. And not only the West. Thus, Taiwan is rapidly leaving China. Taiwanese firms are increasing investments in the US and Europe to reduce dependence on China. China absorbed only 2023% of Taiwan's outward investment flows in 11, down from 34% in 2022.
The idea of creating a new global factory based on former British India - India, Pakistan and Bangladesh - was also voiced. Advantages: integration of the local elite into the Western (British); cheap labor; good level of education in India, qualified public.
The crisis of capitalism and war
In general, the Celestial Empire with its Communist Party and market economy (capitalist with a strong public sector) found itself in a classic crisis of capitalism. It is impossible to grow further on the basis of loans.
China has growth: in 2023, the economy grew quite well by 5%. True, it is possible that the Chinese are playing with statistics. Then the situation is even worse. And for an economy that is burdened with a huge debt, this is at least stagnation, or, in a bad scenario, degradation. That is, either China will repeat the scenario of Japan, which has been in economic stagnation for more than 1990 years since the early 30s, and other “Asian tigers.” Or we will see a sharp degradation, with the threat of unrest and collapse. When the more developed coastal provinces will dump ballast in the form of the less economically developed inland provinces.
Naturally, in such conditions, the military scenario of a “small victorious war” quite suggests itself. This is a classic of capitalism. The war will clear out debts, restart the economy through the military-industrial complex, and it is also possible to create a yuan zone by shifting debts to allies and neighbors.
The USA went through such a crisis and war, became a superpower (Origins of World War II: USA vs. All). The Great Depression, the organization of the World War. Pumping up the military-industrial complex. The dollar as a world currency.
The problem is that the owners of the collective West are fully calculating this scenario and are even pushing the Celestial Empire towards it. The United States has long prepared a number of conflict zones - Taiwan, the Korean Peninsula, disputed islands, and a number of border disputes. The United States also has its own proxy satellites, such as Taiwan, the Philippines, Japan, and South Korea. Other neighbors of China, such as Vietnam and India, also do not want to be part of the sphere of influence of a potential Chinese superpower.
And China needs a clear victory with an obvious result. That's why Beijing is hesitant. But in any case, the situation is still developing for China according to an extremely unfavorable scenario.
The economic collapse of the PRC also threatens Russia with big troubles.
Information