China near collapse?

I am a Chinese working as a China analyst at a think tank. It is becoming more and more apparent to many people, that the ruling Chinese Communist Party (CCP) knows it is on its last straw of survival.

The party is facing severe and endlessly increasing systematic stress on all fronts:

1. Increasing external oppositions from all other countries in the world including all of China's neighbours. They are forming more and more alliances and becoming more outspoken with rising strengths against China, in addition to increasing anti-China sentiment from people in all other countries. Many countries including Canada and Australia have tightened their immigration policy to prevent Chinese from entering their countries. Even on these casual internet message boards, when you look past the paid Chinese propaganda professional commenters, you notice rising general anti-China feelings from all over the world.

2. Increasing internal severe and massive violent social unrest and anti-CCP mutiny from people of all Chinese living places. To beat down internal dissent in mainland China, the CCP every year is forced to spend even more money than on its massive military budget. All the semi-external places (Hong Kong, Xinjiang, Tibet, Macau) are fighting harder and harder to break free from China. Taiwan is for all practical purposes already a separate democratic country, and anti-China sentiment there (especially among younger Taiwanese generation) is at all-time high after seeing how China violently suppress Hong Kong as an example of "reunification". This whole situation is continuously worsened by the free flow of information, with Chinese people knowing more and more from travelling abroad and learning about truths from jumping beyond the "Great Fire Wall" on the internet.

3. Its own economy and social condition never able to advance to higher level beyond mass skill-less manufacturing, due to complete absence of law and common morals. High technology and innovations and scientific development all require many citizens working together voluntarily contributing long term in a system they trust, with things like rule of law, no censorship on knowledge, no restrictions on speech and expression, copyrights, patents, common morals when collaborating and trading with each other etc. These qualities are all destroyed in modern China by the CCP. When was the last time you heard an announcement of technology development or innovations or scientific breakthrough coming from a Chinese organization / company / university? You haven't because there ain't any. Unlike mass manufacturing factory work, these high level human developments cannot be forced on or bought with a dictator's central planning. The only way modern China gets these things is from stealing and spying from all other countries, but that has become much more difficult since the whole world has caught on to their act.

This systematic fatal weakness is why you do not see even one Chinese brand or company that can compete in the international market in any industry of the human race. For example Lenovo, who is already one of the few Chinese brands some people may have heard of, cannot make either the chips that power their computers or the operating system that run them, so it is just one of many plain vanilla boxmakers without any competitive advantage. Another example Huawei is blacklisted by many countries and international customers because everyone knows Huawei's products send all communication data back to the CCP. No rule of law in China also means no people or businesses, both Chinese and foreign, ever invest in China long-term or on a large scale because everything frequently change on a whim along with the political climate. No one trusts any contract or agreement in China because they are always broken by the Chinese and there is no legal protection whatsoever, meaning China can never advance to a knowledge economy or service economy. No rule of law also ensures Shanghai fail to become a financial city despite the CCP dumping huge resources into it for 30 years.

4. China's mass skill-less manufacturing itself is going away to other countries due to sharply increasing costs and openly hostile and unfair business environment full of frauds and sanctioned protectionism and government robberies. The labor force is endlessly more demanding both in wages and benefits expectations and working conditions, especially since all of today's Chinese workers are single child used to coddling and indulgement by their own family. It is further worsened by the rise of robotic automatic manufacturing and 3D printing. This situation is a death knock to the "growth-based legitimacy" of the CCP, which is the only thing CCP can rely on for continuing ruling power. For sure Chinese people tolerate the CCP when the economy seemingly explodes, but when one day it crashes and the country's hopeless bad shape hit them in the face the people's "support" for the CCP will turn on a dime.

Since six months ago, all the major economic indicators for China have gone on a continuing nosedive - including manufacturing orders, export volume, commercial investments, graduate employment rate, corporate credits, foreign capital inflow, domestic consumptions, real estate prices, consumer spendings, luxury goods demand, HSBC Service PMI, survey of business sentiments etc. Suddenly all the rich Chinese tourists gobbling up luxury goods at different world cities seem to have disappeared altogether. The CCP is on its last resort of printing literally trillions of worthless renminbi to dump into the economy, causing way more long-term harm than short-term help, and when that is over there is nothing else the CCP can do to prop up the failing economy. China currently ranks 82nd on GDP per capita and that is the highest it can go before falling sharply in the coming near future.

5. Fierce unstoppable purges and mutually-destructive infighting among different factions within the party, who are imprisoning and killing each other every day. This power grab goes on under the laughable thin guise of "anti-corruption drive" when everyone knows all officials in china are corrupted. No work to manage the country or guide the ship is being done while this is going on.

6. Its many previously-suppressed fatal problems have all grown too big to be contained all catching up to the CCP e.g.

- severe carcinogenic poisonous pollution everywhere in air and water and soil and their own food etc, with the WHO issuing multiple warnings on Chinese population having the fastest cancer growth rate in the whole world - skyrocketing unrepayable bad debts of all kinds everywhere, its true scope no one on Earth knows because all data from China are faked - biggest housing bubble in human history, in addition to innumerous crumbling "ghost cities" and shoddily-built vanity project infrastructure that cannot and will not be used - rapidly aging demographics with a 140:100 male:female ratio (from one child policy, culture of "leftover women", and many Chinese families killing their own daughters so as to chase boys) - world's no.1 wealth inequality, with a Gini coefficient rivaling 18th century France just before the French revolution - complete absence of soft power / cultural influence / social attraction, partly due to CCP censorship. One result of which is minimal and sharply dwindling number of foreign professionals and tourists and students going to China. It also means the CCP only has force as the only tool to use on the international stage - all Chinese chasing foreign-brand goods and services while ditching low-quality Chinese-brands, who have a well known history of poisoning their own food and their own baby formula so as to make more money. This dashs CCP's hope to build indigenous industries and a domestic consumption economy - corruptions and fraud throughout the whole rotten core of a system - desperate mass exodus at all levels of Chinese society to escape the country using emigration or buying houses / study abroad or marriage to foreigners or plain old human smuggling, resulting in all able Chinese leaving taking huge amounts of talents and money out of the country - the law of large numbers, "middle-income trap" and "Minsky moment" all work against the growth-based legitimacy CCP desperately needs for its survival

Most importantly, the CCP knows that if 1.4 billion Chinese learn about basic human qualities such as morals, truth, justice, human rights, rule of law, fairness, freedom, universal values etc the CCP will be toppled very quickly. Therefore its state-controlled brainwashing education and propaganda machinations ensure a complete lack of morals and regard for laws in all Chinese growing up and beyond. This results in failure in all basic aspects of human interactions with every modern Chinese, whether it is business trading / personal dealings / technology development / creating innovations / human communications / scientific research / artistic expressions / teamwork collaborations / academic exchange etc. Another propaganda brainwashing technique used by the CCP is to make all Chinese people pathologically nationalistic and very emotional on this issue, so the CCP can always create and point to some "foreign enemies" so as to hide all the domestic crises and government robberies going on. This attention-diverting technique is the same trick magicians have used for more than a thousand years to fool their audience.

An interesting example would be the Chinese reaction to this report - they are expected to dismiss this report as total rubbish, accuse the author "unpatriotic" for saying the truth, shout China will only become richer and stronger than all other countries, yet they will give no counter-arguments and they will make no acknowledgement to the horrible factual conditions and complete lack of basic human qualities listed above in modern China. Ironically, the longer Chinese people deny or refuse to acknowledge the CCP problem, the longer they are only digging themselves into the hole and hurting themselves for any chance of recovery, causing the chinese economy to crash even further. Consider the example of Google, Facebook, Wikipedia, Youtube, Whatsapp, Twitter, Instagram etc - these services are all completely blocked in China while at the same time the rest of the planet are on these services every second communicating ideas with each other, making friends, exchanging knowledge, doing business, working together, improving science and technology and arts, and advancing humanity.

Some people say China economically developed a lot in past 30 years, but the truth is this "development" is actually debt borrowed against the future. After the 1989 Tiananmen Square massacre of their own students, in order to survive and hang on to power, the CCP was forced to pursue short-term explosive economic growth that sacrifice everything else, including a foundation or potential for long-term economic and social development. This "scorched earth" policy is like winning the lottery for corrupted CCP officials who can rob a lot of money from the country in the short-term before escaping to America. The only entity left to suffer is China's future from this point on, a country that has been turned by the CCP into a place with no law, no morals, no system for future scientific or economic or social development, no spiritual support apart from money, no trust or cooperation among Chinese, no trust or goodwill from foreigners, no other country as friends, all resources sold away cheaply, entire environment and air and water and soil and food fatally polluted, only social recognition is to make a lot of money for "face", no creativity or personal development for Chinese young people, a populus not allowed to know the truths and not allowed to say the truths.

The end result is that majority wealth of this "debt borrowed against the future" has gone to the 0.00000001% elite ruling class "princeling" CCP families (about 250 of them) who have already smuggled trillions of dollars abroad along with their U.S. passports and their own children (all Chinese elites and Politburo members hold foreign passports, with U.S. and U.K. being the most sought after choice). For the CCP in 1989, 1.4 billion people is great central-planning asset when the country start from nothing and you order them to do backbreaking mass manufacturing repetitive factory work 20 hours a day without workers protection of any kind. But in the 2014 borderless knowledge economy when that no longer works, 1.4 billion immoral and uncooperative and selfish and undeveloped and angry Chinese contained in a lawless system without any hopes of growth is very, very dangerous liability for the CCP.

All debts against the future have to be paid back - China is no exception. That moment may arrive a bit later than expected but it surely will come, as it has on 100% of occasions in human history. In normal countries bad conditions correct themselves with short periods of market ups and downs, but in China the CCP suppress all problems and criticisms until inevitable system meltdown. For China the moment has arrived to suffer the consequences for all its own chosen actions in past 30 years. All the festering fundamental systematic problems listed above and much more, are only getting worse and worse everyday until one day when the system can suddenly no longer bear.

( Cliff notes summary for the smartphone generation with Attention-Deficit-Disorder:

- The Chinese Communist Party (CCP) chose a path of no return to pursue miraculous economic growth - Miraculous economic growth has been achieved, now China has hit the wall and the bad things have caught up - CCP cannot go on externally, it cannot go on internally, no more economic growth is possible, many fatal cancers and huge structural problems from the past now overwhelming the country - Something has to break, what happens is anyone's guess, guranteed to greatly impact China and the world )

“Pretty amazing math there, everything is sold at a loss and they hold trillions of our debt.”

They may lose on each sale, but they make it up in volume.

Very interesting article! Thanks for posting it!

Seems to expose the large vulneralbilities in China, despite all of their military buildups and bluster. The country seems to heading for a population uprising and possible coup. If such occurs, it might even give the NORKs the courage to do the same.

“Everything stated is probably true, however that is not the underlying reason for the Chinese collapse. It is the one child demographics. The population of China is inverting. One child. Two parents. Four grandparents. Six elderly dependents. One marriage equals twelve elderly dependents. There is no social security or medicare in China. The dragon in the living room is actually an elephant.”

Your math is off a bit. One child, two parents. Two children, four grandparents, One marriage, on average four grandparents, whose care is divided between the four parents and two children. By the time the four parents are unable to take care of themselves, the four grandparents are dead. So it is a roughly two to one ratio...

It is still bad news compared to the the U.S., but not any worse than when on average only two children survived of many, there was no real sanitation, vaccination, or communication, and animal power was the greatest motive force, which is to say, for most of history.

I agree with you. Their "long game" was no better than anyone else's. Mao took China only with enormous support from Stalin and treasonous help from inside FDR's administration. As for Lenovo, I have held it through a 30% price increase in one year.

China is the fastest growing Christian nation in the world---even if their percentage of the population is small, the total numbers are.enormous. Just a point to consider.

They may lose on each sale, but they make it up in volume.

Ah-ha! So that is why GM is investing so much in China. They finally found someone else who believes in their "lose money on every sale, make it up in volume" business model!

Their fundamental problem is cultural. Cheating is rampant from grade school through adulthood. Capitalism thrives on a culture of trust and fails on a culture of distrust.

Look what politics and crony capitalism are doing to America.

If they dumped treasuries, for whatever reason, the price of those treasuries would drop. A drop in price means an increase in the effective interest rate.

In order for the US to sell bonds at the weekly auction, they would have to sell them at at least an equal interest rate.

Since we turn over debt at a fairly quick pace—and we are adding half a trillion a year, the effective rate on new issues would go up.

It’s not speculation at all. It’s the way the bond market works.

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