Are the Chinese attempts at climbing up the citadel of global power facing headwinds? Are the impediments both domestic and global? Is China asking for 800 million against its US Treasury bonds a sign of cash crunch? Are the Chinese contemplating a major move on the Taiwan front as the West remains focused on a rising tide of violent conflicts? The article grapples with such questions and a few more issues of import.
A large section of subject experts and analysts predict a gloomy economic and political scenario for China in the times ahead. The confidence in China’s ruling dispensation of a bounce-back post-COVID seems to have failed. Reduced demands for its goods in the international market, limited capacity for internal consumption, global manufacturers seeking other options, the real state bubble and so on have shackled the economy. According to Elmer Yuen, Hong Kong’s pro-democracy activist, China’s backing of the ongoing troubles and troublemakers worldwide, from Hamas to North Korea, has further added to the financial predicaments. The recent reports of the Chinese asking the USA for nearly a trillion dollars, probably against its US treasury bonds of a near equal amount, tend to suggest a cash crunch. On the Political front, Xi Jinping, seen as an unapproachable autocratic leader, looks to be facing internal dissent and massive corruption in all departments, especially the military, where a purge is in full swing.
Are these recent outlooks suggesting China is on an irrecoverable economic and political slide, or is it an image created by the West and China itself as part of their strategies? Perhaps the West, especially the USA, does so to wean away business and thereby the financial muscle from the Chinese, while the Chinese do so to dilute the overbearing world focus, hampering its economic and expansionist intentions.
In the words of Xi Jinping in 2021, “The World is undergoing great changes unseen in a century, but time and momentum are on our side. This is where our force and vigour reside, and it is also where our determination and confidence reside”. However, given the inputs on China, by vested interests or otherwise, it appears that Xi appreciates that post-COVID, things have not gone the China way and that the ‘momentum’ may end soon and, consequently, the last opportunity to push for the expansionist and economic agendas is now.
Are the ongoing conflicts worldwide being stoked by China to divert attention? Was the recent Iran massacre done with an ulterior motive to add further to the US-Iran rift? Is an opportunity being created to wrap up Taiwan when the US is embroiled in its internal complexities, especially due to the nearing presidential elections and the fund-consuming external situations like in West Asia and Ukraine? An impartial reality check may be in order.
China’s political dynamics, like those of any other nation, remain complex as the power games in a democratic or autocratic setup remain fraught with the dangers of an overthrow after some time. The internal dynamics of a powerful nation like China have ramifications on the world stage, and each internal or external stakeholder attempts to influence or perceive it in a manner suitable to their benefit or interest. The question is, will China’s thousands of years old approach to power games change with a change of guard? In turn, the difference in guard will translate into a changed, more democratic setup. We must remember that ‘Princelings’ were also born and brought up in similar social and cultural environments and are thus unlikely to make revolutionary changes.
A power rivalry amongst the ‘Princelings’ in a post-Xi Jinping era leading to a social and economic upheaval is a probability. Still, it would not be in favour of these power seekers who may go for collective power sharing. This type of arrangement would be desirable to outside forces but may not impact the geopolitical and strategic outlook overall. It’s difficult to visualise a change in China’s stance in the South and East China Seas, except for being less aggressive. The very survival of Chinese trade depends on SLOCS being free of outside influence and not being prone to interferences.
Change in guard in China is also unlikely to alter its approach on the Sino-Indian frontiers as it has geostrategic and geo-economic ramifications. For any power dispensation in China, unsettled borders are more suited and can be delayed till India becomes equally powerful.
From the economic perspective, the Chinese, a 17 trillion dollars plus economy and only second to the USA, have already tasted blood and would go to any lengths to retain the current status. Historically, China has faced numerous periods of adversity, which they have overcome through sustained resilience, guile, and diplomacy. The well-known Chinese proverb that says, “With money, you are a Dragon – without it, a worm” lies at the very bottom of their power game.
Chinese are adept at exploiting the weaknesses of the rich and powerful in the countries of interest to pursue trade on favourable terms. In the book ‘Red Handed’ by Peter Schweizer, he states that “In the world of espionage, practitioners use the term “elite capture” to describe successful efforts to essentially buy off members of a country’s leadership. Opportunities to get wealthy are a key motivator,” and China is a master at ‘elite capture’. In the very same book, the author speaks of the Bidens, Clintons, Nancy Pelosi and other capitalists having lucrative stakes in Chinese-owned enterprises, which implies that the possibility of damaging actions against China is unlikely, notwithstanding the direct or indirect anti-China rhetoric, which possibly is more for public consumption.
Given China’s control and stakes in countries ranging from the erstwhile USSR to North Korea to Iran and numerous other small nations worldwide, it has adequate potential to cause economic disruptions that can have adverse implications for the US and its allies, mainly those dependent on the very same SLOCS China uses.
The recent news item of China asking the USA for nearly 800 billion dollars may not be for a bailout, but it does give an impression of troubled times. It may also be an effort to offset the nearly same amount held as US Treasury bonds that, in troubled times, could get frozen. In any case, the Chinese have gradually been reducing these Treasury bond holdings, which, as per an analyst, due to “the ‘mismatch between supply and demand’, Combined with it is the US Federal Reserve’s monetary tightening measures, creating downward pressures on the appeal of US bonds. The adjustment is also “a proactive move by China” to optimize and diversify its holdings of overseas assets”
On the military front, large-scale corruption and discord are surely a cause of concern for Xi Jinping. While the Chinese Defence Forces are incapable of withstanding the American military might, they are adequate to cause major security concerns for the Americans and their allies in the Western Pacific Rim. This could lead to criticalities, especially on the economic front. The Chinese activities in the Seas adjoining its coastline are a major cause of ongoing concern, and its augmentation to include threatening Taiwan has major adverse consequences at the global level.
Some experts are of the view that China is creating situations to get Taiwan, which may not be possible once peace returns to the ‘conflict regions’ of the world and the US presidential elections are over. While annexing Taiwan is highly unlikely in the backdrop of US military might, the attempt may facilitate obtaining concessions for the Chinese and thereby strengthen her economy.
In a world driven by individual and collective economic gains at the cost of idealism, it is unlikely that major changes that could adversely impact China are underway. The mismatch between the Chinese mindset with roots in her ancient civilisation and the Western way of thinking will normally lead to incorrect assessments on both sides. There would be frequent rifts which, given the economic interests on both sides, remain short of ruinous results.
As per Elmer, China, however, is prone to rash actions by Xi Jinping if his or the Communist Party’s existence is under threat. A world without Xi Jinping would possibly be a comparatively better world. For India, it’s a wait-and-see game.
Lt Gen Vijay Singh (Retd)