Beijing flexes its muscles by testing super missiles, but has serious economic problems
The news that China has hypersonic missiles seems to have surprised the United States, but it is unknown to what extent that surprise is real. It is a fact that the People's Republic has managed to dismantle Western spy networks, which is why intelligence actions are now entrusted to satellites and space surveillance. With all the limitations that this entails, since even in our super-technological age the 007s in the field continue to play an essential role.
It is worth noting, in this regard, that there is a notable asymmetry between China and the West in the espionage field. The Chinese manage to infiltrate spies under cultural or commercial cover in the main Western countries, for example thanks to the network of “Confucius Centers” very active in American and European universities. Although subjected to greater controls than in the past, they continue to operate and represent valuable sources of information for Beijing.
It is also known that Beijing has significantly increased the budget allocated to the armed forces in the last two decades, and Xi Jinping explicitly stated that the People's Republic intends to equip itself as soon as possible with a war apparatus capable of competing with that American. Yet pessimistic rumors continue to circulate about the real state of the Chinese economy. Acting as a detonator is the real estate sector which risks a structural crisis after the discovery that the construction giant Evergrande is inundated with a debt that exceeds 300 million dollars.
The problem is that there are other giants who are in similar conditions. For example, Jumbo Fortune has not repaid debts for 260 million; Modern Land asked investors to postpone a $ 250 million maturing bond by three months; Sinic Holdings will not be able to repay a 250 million "bond" that will expire in the next few days, and Xinyuan Real Estate is in similar conditions.
In short, it seems that the real estate bubble is really about to burst and, in this regard, it should be remembered that 29 percent of the Dragon's GDP is concentrated in the brick. Furthermore, the real estate sector accounts for about 62 percent of the wealth of Chinese families. Hence the widespread alarm that is also perceived on Chinese social networks (although highly controlled by the authorities).
And it is obvious that this is the case, since the house represents for everyone the main asset, and in many cases even the only one. The real estate bubble therefore risks lowering the standard of living of citizens, accustomed to not worrying given the constant growth of GDP, and of the economy in general, in recent decades.
Faced with such a dramatic situation, the government and the Communist Party are trying to send out reassuring signals. Xi Jinping has entrusted the People's Bank of China with the – indeed very difficult – task of convincing the markets that the risks of the bursting of the housing bubble are minimal. As for Evergrande , the giant company causing the trouble, he argues that his crisis is manageable and that the real estate sector as a whole is healthy.
However, this is not enough to reassure international markets and, above all, citizens who fear the advent of a crisis that would mark the end of the aforementioned economic growth, as well as the deterioration of the purchasing power of families.
Not even a reassuring sign is the closure from the end of October, due to lack of profitability, announced a few days ago by one of the Chinese medium-sized shipyards, Tianjin Xingang Ship Heavy Industry .
As if that weren't enough, the People's Republic is also facing an energy crisis due to the disastrous floods that devastated Shanxi province, with rainfall four times higher than the monthly average. Shanxi alone contributes a third of the country's energy needs thanks to its 682 coal mines. And it should be remembered that Beijing, while adhering to international appeals aimed at containing climate change, has so far been careful not to give up more traditional and more polluting sources of energy.
There is therefore a risk of a cold winter, which the Chinese were no longer used to. And the unwritten "social pact" by which citizens renounce some basic political freedoms in exchange for economic growth is also at risk.
In addition, the pandemic due to Covid-19 has not been overcome at all, despite what the authorities proclaim, and the picture is complete.
Naturally, in any democratic country the enormous military spending would be criticized asking for greater attention to the economic and social imbalances that characterize the People's Republic, in particular those between cities and countryside. But the pervasive control exercised by the Party over every aspect of daily life makes any protest almost impossible.
Some are hoping for a structural crisis in the People's Republic, possibly capable of leading to an overthrow of the regime. However, we must not forget that, whether we like it or not, China has become the true center of world trade (also thanks to the acquiescence of the West). The first to really "smell" the danger was Donald Trump after years of underestimating the phenomenon.
Precisely because of the character that globalization has assumed since the last decades of the last century, a serious Chinese crisis risks causing enormous damage to the world economy. The effects of the difficulties in Beijing are already beginning to be felt, as bottlenecks in the supply chain have considerably slowed down the exchange of goods. All economic sectors are involved. From the apparently less important ones – the indispensable toys for the Christmas holidays – to the strategic ones like microprocessors, without which cell phones, PCs and anything else don't work.
It is easy to note that the aggressive attitude in foreign policy, for example the increase in bellicose propaganda against Taiwan, can be explained by the attempt to rekindle nationalism and, therefore, to divert the attention of citizens from the aforementioned economic problems. A typical attitude, moreover, of dictatorial regimes, which have always tended to discharge internal tensions abroad before they become uncontrollable.
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This is a machine translation from Italian language of a post published on Atlantico Quotidiano at the URL http://www.atlanticoquotidiano.it/quotidiano/pechino-mostra-i-muscoli-testando-supermissili-ma-ha-seri-problemi-economici/ on Wed, 20 Oct 2021 03:45:00 +0000.