SPENGLER: The Chinese Challenge.
American strategists seem to think we’re dealing with the Soviet Union of the 1980s. If only it were that easy! Communism is a bankrupt ideology, a miserable failure at social and economic organization. China is something entirely different. Soviet Communists told their most talented scientists, “Invent something new, and we’ll give you a medal, and maybe a dacha.” China says, “Invent something new, launch an Initial Public Offering, and become a billionaire.” By the end of 2019 there were 285 billionaires in China—including Alibaba’s Jack Ma, who, like many of his fellow billionaires, is a Communist Party member. There are more Marxists in Cambridge, Massachusetts, than in all of China. I met a professed Marxist over dinner in Beijing a couple of years ago—a pleasant fellow who taught Marxist-Leninist doctrine at the Communist Party’s cadre school. His daughter had just graduated from a top American university; he asked if I could help her get a job on Wall Street.
We aren’t facing drunken, corrupt Soviet bureaucrats, but a Mandarin elite cherry-picked from the brightest university graduates of the world’s largest country. America confronts something far more daunting than moth-eaten Marxism: a 5,000-year-old empire that is pragmatic, curious, adaptive, ruthless—and hungry. China’s current regime is cruel, but no crueler than the Qin dynasty that buried a million conscript laborers in the Great Wall. China was, and remains, utterly ruthless.
Read the whole thing. But on the flip side though: Revealed: China fearing reshuffle of balance of powers with Western nations.
China reported a 6.8 percent drop in economic output for the first quarter, its first contraction on record since the death of party founder Mao Zedong in 1976. In recent weeks, President Xi Jinping has launched a New Deal-esque construction campaign, while touting poverty relief and investment in advanced technology to help jump-start coronavirus-hit factories and consumer spending.
Since Xi came to power in 2012, he has fast-tracked political preparations for the end of economic growth. He’s flooded the airwaves with wartime-esque propaganda that lauds individual sacrifice for the national interest, while quashing budding pockets of dissent before they could grow.
“Xi Jinping’s political control policies all along have been guided by a recognition that someday the economic miracle will begin to sputter,” said Richard von Glahn, a China economic historian at UCLA. “The coronavirus has accelerated the timetable.”
In 2010, China’s top leaders commissioned a team led by Liu to study the Great Depression and 2008 financial crisis. The project included officials from China’s central bank and banking regulator, and resulted in hundreds of pages of analysis and policy recommendations published three years later.
This early preparation may give China a head start in its crisis response. As most of the world remains engulfed in day-to-day pandemic relief, China has begun broader strategic pushes, inching outward its sphere of influence in the Pacific and declaring greater control over Hong Kong. Beijing’s overseas push has been made easier by the Trump administration’s domestic focus, with the United States withdrawing from some of its traditional international roles.
However, Beijing’s leaders could face a deeper domestic economic challenge than they initially projected. With the coronavirus outbreak fueling grassroots anti-China sentiment, the Trump administration and other governments are seizing the moment to push for manufacturers to return from China.
Japan announced last month that part of its covid-19 stimulus package will go toward reshoring factories from China, while Sen. Marsha Blackburn, R-Tenn., said she and other U.S. lawmakers are pushing for similar incentives for American pharmaceutical companies.
“Supply chains are going to move as quickly as they are incentivized to,” she said in an interview.
Flashback to last fall: How to Conduct Business with Chinese Companies That See a Dark Future.
I am writing about this now because China today is feeling a lot like Russia in the 1990s. I am getting the sense that many Chinese companies are pessimistic about their futures and they are acting accordingly. Our China lawyers are seeing evidence of this everywhere.
China’s economy is hurting right now. On the one hand, food prices are soaring. See China’s consumer prices rise at fastest clip in nearly 8 years, as pork prices continue to soar. On the other hand, exports are plunging. See China’s exports decline for third successive month in October. Reliable economic indicaters (as opposed to official government statistics) paint an economy in trouble. See China’s economy is in more trouble than markets think. See also China’s car sales drop for 16th consecutive month as October falls 4 per cent. The tariffs are not helping nor is the Chinese government’s crackdown on private businesses. On top of the economic issues, many Chinese companies have become both wary of and angry at the West, particularly the United States. This too makes things riskier for foreign companies.
We are seeing the results of all this in many ways.
Practically every week one of our China lawyers will get an email or a phone call from someone who bought product from China and received nothing in return or nothing even approaching what they actually ordered. This sending of “junk” instead of real product has spread to pretty much every industry in China and ordering your products from allegedly reputable online sites provides little to no protection.
In any case, as a Facebook poster spotted by Glenn wrote last month, “The main event is coming — and it is hastened by a Zhongnanhai calculation that the United States possesses neither the attention span nor the competence to do something about it. You can pick your metaphor: August 1914, December 1941. Just be aware that what they’re contemplating will end up a metaphor all its own.”
Whatever happens, there are certain sections of Texas that I wouldn’t advise you not to invade, Xi…