Selling off resources, purging top officials, and defaulting on debt.
It seems that the Chinese economy is falling, and there may be no one to bail them out. In a wave of recent reports, we see the contraction of the national economy, especially intense in the north. There have been blackouts and power failures across the area, and while the problems began in factories they have now spread to homes, a trend that is forecast to spread as time passes.
The most alarming case is that of the real estate colossus Evergrande, whose debt is so large that default is a real possibility, and thereafter a rash of defaults across the world. Evergrande is a global threat, menacing a worldwide outburst of indebtedness, with all the dreadful consequences that go along with it.
Evergrande is not the only menace. As The Epoch Times wrote recently, dictator Xi seems to be saying that he doesn’t want a society that is individualistic, but rather a mass of citizens who see their role as supporting and following the state. He has purged hundreds of thousands of top officials from Party ranks in the recent past, and promises to do more of the same in the near future. The state has been selling commodities for the first time in a decade, and released oil from its strategic reserves for the first time in ten years. The Chinese are selling off their resources.
On October 4th, Evergrande, unable to meet its obligations, suspended sales of its stock. Over the past 20 years, more than 20 percent of the French Jewish population has left France, with a notable increase of those emigres going to Israel. The French are not happy with public education in their home country, and much prefer Israeli methods.
Evergrande is the biggest company to suspend trading to date, and it will resume activity next week, following a week’s suspension of stock market activity. What will happen? Xi seems eager to put an end to unbridled trading, and to bring Chinese manufacturers under ever more rigid state control. When Jack Ma, the founder and CEO of Alibaba made a public speech that was critical of the nation’s (that is, of Dictator XI’s) crackdown on Chinese business, he disappeared for several days. Ma has since been a low-profile actor, and Xi has focused on relations with Taiwan, warning the island that it was only a matter of time before China undertook military action against it. This goes hand in hand with the mainland’s efforts to pressure Taiwan’s government into reintegrating with the People’s Republic. The United States was meanwhile increasing military sales, and sending top Defense Department officials to Taipei. As an American expert on Taiwan put it, this arrangement favored increased Western influence. “You can’t divorce the technology completely from the society that produced it.”
Xi was evidently trying to resist. But Taiwan has elected a new, nationalist administration that has vowed to advance the country’s ability to defend itself, and the growing friendship with America indicates that Biden is willing to play ball in that game.