Strategic Planning Group Fall 2023 Newsletter

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China’s House of Cards By Alex Craner Comprehensive counseling with achievable and time-based goal setting for retirement and estate planning, without secrets or short-cuts, are ingrained features of Alex’s services. It has come time to speak bluntly about the problems that China is facing. My first recommendation is to recognize that China has mastered deception. China, more specifically the Chinese Communist Party, is a tactician in the game of whispers and lies. All bad news is suppressed, and all good news is amplified. Unfortunately for the CCP, the mask is slipping. Whether we examine it through a domestic, international, or heck, even an extraterrestrial lens, it is evident that the Chinese system is plagued by a multitude of problems that are becoming progressively more apparent. From economic challenges and a deteriorating political structure to unfavorable demographics and an extensive array of other concerns, the prospect of China’s collapse should no longer be a surprise to anyone. In recent months, a concerning trend has emerged in China, characterized by a multitude of issues across economic, political, and demographic fronts. Observers have noted a sharp decline in consumer spending and lending, which is particularly alarming in a country with a strong capitalist drive. China’s usual approach of injecting capital into every sector has hit a roadblock, leading to stagnant lending practices. The world has witnessed the dismissal of the disappearance of prominent figures, such as the foreign minister and defense minister, underscoring a growing sense of instability. Troubling statistics, including skyrocketing youth unemployment, have prompted authorities to cease collecting such data altogether. This data blackout extends to bond transactions, a crucial element for achieving a more sustainable economic structure. Even the much-touted “valueadded scale” strategy, which China had emphasized for years, appears to be abandoned. The situation can be described as a broad-scale societal, economic, and political breakdown. While the suddenness of these developments may be a shock to some, it is essential to recognize that these issues have been brewing for several years. From an external perspective, the world’s focus has been on its own challenges, such as the Ukraine conflict, Iran’s activities, and domestic political transitions in the United States, Europe, and Japan. China’s internal issues were somewhat overshadowed by these global events until they became too prominent to ignore. Within China, Chairman Xi initiated a series of purges under the pretext of an anticorruption campaign. This move systematically eliminated regional power centers and neutralized factions associated with previous presidents, effectively quashing potential rivals. In addition, data collection on various aspects, such as college dissertations and political biographies, has dwindled. These measures have created an information vacuum, hindering the rise of new political leaders. One of the critical inflection points that contributed to China’s current state is its demographic situation. The birth rate in China has dropped by nearly 70% since 2017, the fastest recorded decline in Strategic Planning Group 10
human history. This decline in the working-age population has exacerbated issues related to consumption and labor costs. China’s industrial competitiveness has also been eroding. Geopolitical challenges, such as the Ukraine war and China’s vulnerability to energy and food supply disruptions, are adding to the complexity. The infrastructure between Russia and China is fragile, requiring goods to take a convoluted route around the world, making supply chains highly exposed. In the backdrop of these challenges, the Biden administration’s protectionist stance further complicates China’s access to global trade. It appears that China is caught in a perfect storm of issues from every angle, and Chairman Xi’s consolidation of power has left the system ill-prepared to address these emergencies. The demographic crisis and political failures are pushing China toward an economic breakdown, and it’s possible that external factors might accelerate this process. The biggest risk lies in whether the world can adapt quickly enough to these changes. We may not realize the extent of China’s problems until the products we rely on stop arriving. The industrial demand for products that China supplies is substantial, and we may face shortages if we don’t take swift measures to build up our own domestic capacity. The challenge lies in bridging the gap between our current reliance on Chinese products and our ability to replace them. The urgency of the situation suggests that waiting any longer is not an option. What this means for The United States and the rest of the world is, in the short-term, major shakeups in manufacturing and supply chains that will likely come with a host of uncomfortable puzzles to solve… but in the long-term? This will result in reprioritizing domestic production and selfreliance. In my view, this is a very good thing for our country. On the other side of whatever fallout may occur, we will be more secure and robust as a nation, no longer reliant upon an unfathomably corrupt and immoral regime halfway around the world. For every decision, there is a consequence. China’s decisions are reaching critical mass, and the consequence will be their collapse. We are watching the final decade of China’s rise, and I can only hope that something more just will rise from the ashes. Sources: https://www.conference-board.org/pdf_free/economics/bci/CPREmatI.pdf https://www.conference-board.org/pdf_ free/economics/bci/CPREmatI.pdf https://www.conference-board.org/topics/business-cycle-indicators/press/chinaglobal-lei-june-2023 https://qz.com/438207/hsbc-will-no-longer-provide-one-of-the-best-gauges-of-chinas-economy https://www.un.org/en/desa/india-overtake-china-world-most-populous-country-april-2023-united-nations-projects 11 Strategic Planning Group
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Strategic Planning Group Fall 2023 Newsletter

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