Xi Jinping’s new world order is collapsing before our eyes. By Matthew Henderson.
Leading Western technology companies, alarmed by geopolitical uncertainty and facing hostile data “legislation,” are marching out of China in droves. …
Sub-par performance by the best-known Chinese stocks are compelling some seasoned Western asset managers to cut their exposure. …
A tipping point in China Risk is rapidly approaching …
World domination:
Xi Jinping is forging ahead with plans for a revisionist New Era in which China becomes the sole super-power in an authoritarian, post-democratic world order. His immediate tactics include expedient alliances with other enemies of the West to defeat sanctions and other preemptive counter-measures short of military conflict. …
Not so fast:
China rapidly globalised its economic influence by exploiting the West’s illusion that, once admitted to the World Trade Organisation (WTO), it would engage in trade according to WTO rules and norms. But from the outset it denied foreign businesses free and fair access to its domestic market and used massive state subsidies to capture market dominance for its own products and systems across the world.
From 2018, the US has led a de facto trade war against this, while remaining uncomfortably tied to the Chinese economy by enduring debt and supply-chain dependencies.
Subsequent geopolitical and economic tensions have progressively worsened due to China’s human rights abuses, political interference, cyber espionage and IP theft, mistrust and sourcing disruption caused by the pandemic, alignment with Russia, and threats to Taiwan.
This has led to an accelerating exodus of major Western companies from China to more reliable regional bases in South-East Asia, India and Bangladesh. The low cost of factory labour in China, formerly a major draw for FDI, no longer applies. Factory wages in South China are now around three times higher than in equivalent South Asian industries.
The Chinese economy has long been struggling under Xi Jinping’s Marxist ideological chokehold. Covid lockdown early in the pandemic was a kneejerk CCP crisis management response to potential social disturbance. Imposed disastrously late, it slowed transmission but failed to boost immunity. …Unsurprisingly, promised recovery has not been realised.
Exports are depressed and the property market is in disarray, with more and more major players being delisted on the Shanghai stock exchange. The tech sector remains traumatised by Xi’s politically-motivated crackdown in 2021, which has wiped out many jobs for educated young workers at a time of serious youth unemployment.
Debt remains toxic, demographics are intractable (despite a huge surge in mortality among the under-immunised elderly soon after Zero Covid rules were abruptly relaxed). Environmental stresses, particularly water security, are worsening. …
Xi is hoarding gold, securing energy supplies and building up China’s military capabilities, in particular those used to threaten Taiwan.
To argue that he will not, for some time at least, invade Taiwan for fear of the economic consequences misses the real point. Xi would prefer to annex Taiwan without a fight, but he needs to be able to flex enough military muscle to undermine US support to the point that the Taiwanese lose faith in it and accept the inevitable.
Xi is on the right side of history. Leftists are always on the correct side of history, they assure us. The way they tell it, to defy them is pointless.
hat-tip Stephen Neil
