Desperate China is gearing up for a war with the West
At the Chinese Communist Party (CCP) Plenum in July, Xi Jinping outlined a major programme for reviving the economy.
A mainly monetary stimulus package intended to achieve this was announced on 24 September, just ahead of the National Day Golden Week holidays, triggering a surge in China’s stock market. But the holidays showed little sign that consumer confidence is recovering. Disappointment at no further fiscal stimulus measures since the holidays has wiped most of the recent gains off China shares.
The Chinese economy remains mired in troubles largely of its own making. Xi Jinping has not delivered the breakthrough in domestic confidence that is desperately needed. Instead he has doubled down on repressive, anti-entrepreneurial controls at home, and has increased China’s sanctions and tariff burden by crude aggression and coercion overseas. Where is all this leading, and what are the implications not only for global prosperity, but also peace and security?
It helps to be clear that despite continual emphasis on “reform and opening up”, Xi has no real interest in either. An instinctive Marxist-Leninist and would-be autarch of a repressive Party-State, he mistrusts anything that might empower private enterprise at the cost of Party authority.
Xi also fears the spread of liberalism akin to what the CCP believes led to the collapse of the Soviet Union. Since this distorted logic has led to intractable increases in ills such as youth unemployment and other quantitative indications of deep-rooted malaise, Xi now bans publication of statistics revealing policy failure. Instead he has come up with an empty formula he calls “high-quality growth”, wreathed in aspirations about “balance” and “sustainability”.
Like his equally tenuous notion of a “dual cycle economy” where China becomes more self-sufficient while seizing an international lead in exports of new technology, this euphemism merely highlights his lack of a deliverable, robust vision for renewed growth and prosperity.
At the same time, having made the disastrous error of backing Putin’s war on Ukraine, and deepening ties with Iran, North Korea and other tyrannies, Xi has reduced China’s chances of restoring the ubiquitous trade balances that fuelled China’s export-dependent growth before the Covid pandemic. Xi’s aggression over Taiwan is now widely linked to Putin’s brutal attempts to crush Ukraine’s democratic independence.
With the domestic economy stagnant and headwinds raging in formerly complacent export markets, Xi has exposed unilateral cynicism behind his Belt and Road Initiative. Despite the Potemkin ethos of a recent pan-African forum held in Beijing, China’s loans to sub-Saharan countries are declining, and engagement flourishes mainly where easily-exploitable local resources meet China’s strategic needs.
The same is true in Europe; Chinese investment concentrates on sectors (e.g. medicine and healthcare, electric vehicle sourcing and sales cycles) where China seeks mastery of innovation and market domination. China has narrowed its focus on governments which are supportive of, or indifferent to, China’s wider contest with US hegemony – including Hungary and increasingly, Spain. Crucially, this approach is driven not by commercial or financial considerations but the pursuit of an implacable realpolitik aimed at delivering Chinese combat readiness, now one of Xi’s most frequent catch-phrases. This includes the harm to client security attendant on EVs as Trojan horse for data collection.
Beijing is also swift to exploit indications of political weakness and hesitation, notably in the UK since the recent elections, where a familiar band of CCP apologists has supported pressure from China on wavering institutions directed by inchoate, naïve policies.
All the above does not, as might rationally follow, make Xi moderate China’s zero sum bellicosity through a sense that caution might be the wiser course. On the contrary, China’s uncontested autocrat marshals his minions to pick fights across the world, as if now is the time to test the mettle of the US, its allies and partners.
After the US elections bilateral rivalry will likely continue on all fronts, from increased mutual tariffs and sanctions to a heightened risk of a shooting war breaking out over Taiwan. The only thing Xi Jinping seems capable of growing is China Risk; yet incredibly, despite early signals to the contrary, the new UK government still seems inclined to hedge. Before events beyond our control intervene, it would surely be better to focus urgently on the strategic defence of our most important national interests.
