Focus – On China’s Next Move

As Americans struggle with explosive gas prices and interest rates, twice as high as when Biden took office, inflation touching 9 percent and interest rates jumping from 2.65 to 5.78 percent, China’s facing a crisis too: rising economic unrest – which could turn political.

Within the past month, President Xi has faced a “surprise revolt from Chinese homebuyers,” rolling “mortgage boycotts” affecting 91 cities, more than 300 housing projects.

These protests are based on the demand for payments from over-leveraged, government-affiliated developers, who took people’s money, never delivered a home, and are now sliding with the Chinese economy. This source of unrest alone may affect two trillion dollars in holdings, as the property market is one-fifth of China’s economic activity, 70 percent of household wealth in the home.

Predictably, these protests are met with violent suppression, widespread beatings, disappearances, social media and media blackouts, and Taliban-style goon squads, consistent with Communist practice. Still, they are not likely to end soon if the people continue losing their lifetime wealth.

Meantime, the Communist country is wrestling other big challenges such as mass surveillance and social control track where people go, what they can do, know, see, earn, and undertake without punishment.

After suffocating democracy in Hong Kong, China locked down 26 million people in Shanghai over COVID and still has rolling lockdowns, often cross-engineered to block social unrest, including mortgage boycotts.

Problems multiply, as China faces continuing COVID issues, and possible energy and food shortages, with recent rolling blackouts giving rise to fears of a possible return to blackouts faced in 2021.

On the food front, China’s hypocrisy is glaring, hoarding food and fertilizer, buying up global farmlands, trying to keep food prices from rising, while largely ignoring the world’s food crisis – made acute by Russia’s invasion of Ukraine, nominally supported by China.

As the US recently contributed 27 billion dollars to the UN World Food Fund, China offered three million dollars, in other words – the US gave 9,000 times what China gave. Making matters worse, odds are high that China will use what they did not give to coerce, leverage, or threaten smaller countries in Africa and beyond with bilateral food aid, as the Russia-triggered global food crisis grows acute.

Returning to the spreading Chinese revolt over the home loss, China’s population often puts a whole family’s money to buy a home, so when that investment and home vanish or is never built, lives are profoundly affected.

Like a perfect storm, China’s leadership faces internal unrest at exactly the wrong time, with the 20^th annual National Congress of the Communist National Party occurring in November. Communist dominance will be pinned to themes of “common prosperity” and foreign policy – but if common prosperity bombs and foreign policy is faltering, the event could be worse than hollow.

Several implications grow from China’s shivering economy, “mortgage boycott” protests, ramped up Communist Party suppression, rising energy, food, and living costs, plus the pending National Congress.

One is that China will likely do as powerful but inherently fragile totalitarian governments do when anxious about power, hear footsteps, fear their people, need to tighten control – they clamp down, hard. The “mortgage protests” may be modest, but they could catch fire, set fire to other issues.

On the flip side, if popular unrest grows, the impact could be anything from small and episodic to surprising and transcendent. The Communist Government knows this, which is why they are uneasy.

Second, the Communist Party, despite China’s heavy economic integration with the world, may pull back in ways like stiff-arming the UN on food. As their economy trembles, they may turn inward. China’s economic growth is dramatically down, just .04 percent in the past fiscal year, far below predictions.

Third, as internal pressures grow, so does the risk that the Communist Party will look for distractions, especially foreign policy distractions. The obvious target is Taiwan, already be in China’s military sights. China’s odd overreaction to Speaker Pelosi’s trip suggests reverse engineering, possibly setting up a provocation claim that “justifies” military action, not unlike Putin’s claims and actions in Ukraine.

Net-net, these events – including the inevitability that the US will be pulled in, economically, politically, diplomatically, and possibly militarily – to conflict with China means one thing: US policymakers, the US defense, intelligence, and diplomatic communities, as well as every member of Congress, must be on alert. This is a potential powder keg, as China’s rising insecurity is directly tied to potential risky action.

Some will say, worry not, look away, give China no more time than we have for 50 years, but that is not what signs suggest. They suggest China is on the move, in a risky and risk-taking transition, perhaps egged on by weak US leadership. Only a nation indifferent to Communism, global war, human repression, and ignorant of history would look away now. Our job is to focus – on China’s next move.