Multiple reliable sources indicate that China’s President Xi Jinping is out of power. This could be made public in August during the 20th CPC Central Committee Fourth Plenary Session.
The new leadership will reverse much of Xi’s policies and return to Hu Jintao’s time.
This is good news on many fronts. Relatively more freedom—religious, social, political, and economic—cannot be bad.
Not that people had admirable freedom in Hu’s time, but it was far worse under Xi. Churches are closed, and Christians are persecuted, to degrees far surpassing Jiang Zemin’s and Hu Jintao’s times. (But you don’t hear much of that from mainstream media. You only hear from them exaggerated reports on the Xinjiang Uyghur region, where China actually has historically justified reasons to be cautious and even nervous.)
However, most Americans don’t really care about the religious, social, and political freedom in China. Even when we do, we do it with a lot of hypocrisy.
So let’s talk about the economy.
The current consensus, both domestically in China and internationally, is that Xi has damaged China’s booming economy.
But Xi only accelerated an inherent trend of China’s economic model. Xi’s “new socialist planned economy” is a continuation of the CCP’s fundamental political and economic philosophies. He only made them more overt and forceful.
Any analysis of China’s economic system misses the big picture without realizing the following basic fact:
China’s economy is a nationalist economy.
Note it is “nationalism” instead of “mercantilism.” They are different, the latter being just one aspect of the former. Mercantilism is an economic policy designed to maximize exports and minimize imports of a nation, whereas a “nationalist economy” weaponizes its economy to defeat other nations.
Externally, China has not only followed schemes of a nationalist economy but, in fact, has been further strategizing with such game rules with a hardening attitude.
The trouble is that not only the Americans but also the Chinese themselves fail to realize that China has developed a nationalist economy and is ever more determined to further this system.
For Americans, it is because it’s hard to imagine (much less believe) that the other side could be doing such a thing (although under the Trump administration, Americans became more Chinese-like in this aspect).
For the Chinese, however, it is hard to understand or believe that others are NOT doing just the same, or if they are, what would be wrong with it (i.e., having a nationalist economy).
It’s not just because of political differences. It’s deep in the culture.
To China, a nationalist economy is simply natural. In Chinese, the word for “country” is “国家” (national family), and therefore, the national economy is naturally a “family business.” In fact, the idea of a nationalist economy is so natural to the Chinese that it is even hard for the Chinese to believe other countries are actually different.
Under the CCP (Communist Party of China), a nationalist economy is far more than a national sentiment; it is an extremely well-structured and well-organized “war” machine.
This is why China can become extremely competitive in strategic key industries and fields, even if its overall economy tanks and the Chinese people become less well-off.
And it is evident that under Xi’s leadership, a vast majority of Chinese people became less well-off.
This is because China’s nationalist economy has one important characteristic: it invests, exports, and reinvests, repeating the cycle. As a result, economic benefits are not evenly distributed. The majority of people only enjoy a disproportionately small fraction of GDP growth.
Today, consumers constitute just slightly more than one-third of China’s economy, in sharp contrast with over two-thirds in the US.
Inequality, China style.
Nature’s revenge on unfairness
But all inequality will always find its way to revenge. Decades of China’s national investment model have finally reached the point where people simply don’t have the money to buy things.
And that, if not handled properly, could result not only in the collapse of the economy but also in the collapse of society.
Ironically, the United States has come from an entirely opposite direction but is reaching practically the same result.
Inequality.
Unlike China, the US has a seemingly booming consumer sector. US consumer spending constitutes more than two-thirds of the US economy, while in China it is only one-third.
However, the American consumerism boom is fundamentally fake. It has been temporarily boosted by dangerously irresponsible monetary and fiscal policies, plus the temporary benefit (but long-term harm) of cheap imported goods.
I have numbers to prove my point, but that requires a separate article. (See, for example, The American addiction and the trade war)
Back to the China situation. With Xi gone, can the new Chinese leadership save China from its economic collapse?
Everyone has their own opinion. My view is simply this: it is very unlikely.
What about the US then? At this point, fewer people realize or are willing to acknowledge that the US economy is also collapsing. But it is.
So the question is, can the current administration save the US from its economic collapse?
Again, very unlikely.
The newly passed so-called “big beautiful bill” is a strong indication that the train is heading toward disaster, and it is unstoppable.
So both the US and China are heading toward disaster, though for different reasons. China, because the nature of the CCP predetermines that the power-control condition cannot be changed without a total political revolution. America, because the nature of democracy predetermines that politicians cannot govern without focusing on short-term appeasement to voters.
Read more: The Looming Economic Crises in China and the United States: A Tale of Two Inequalities
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