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I have been getting many requests for a Broken China Update. I have been reluctant to post one. It's not like there aren't many news worthy things going on in the PRC, there are. All of the negative economic trends I have previously reported on continue. A few are improving, most are significantly worse.
Most of the items I am seeing recently relate to political and military items. I am VERY hesitant to report on these items are they are the hardest to verify and the easiest to latch on to the wrong thing and say, "See, look at this. This proves thus and such. Blah, blah, blah. Yada, yada, yada." This is why I try so hard to stay away from reporting and prognosticating on political, vice economic, things I am seeing.
Item One:
There is a new economic item that I consider VERY bad for pretty much everyone in China. I am seeing multiple reports that State Owned Enterprises (SOEs) are shutting down and furloughing workers and management for lack of work. This is bad for several reasons. 1) They represent a small, but significant, portion of the PRC economy. 2) They tend to be focused in things like steel and cement. This tells me there isn't going to be any recovery in construction this year and probably next as well. 3) They are a vital source of revenue for provincial, county, and municipal governments. 4) If the SOEs can't get work, the private companies aren't getting it either.
This ties into reports I am seeing that county and municipal governments are having increasing problems paying their workers. Any country having problems paying municipal workers (police, fire, bus, medical, and teaching) is a country in DEEP financial trouble. I have reported this before but it seems to be getting worse and spreading.
Item Two:
The reports that millionaires leaving the PRC are now moving down to the upper middle class(UMC). In 2023 an estimated 1,300 millionaires left China. The estimate for 2024 is 15,800. These are the people with the means to get out. Now I am seeing reports that the UMC are leaving as well. By leaving, I mean fleeing. Take your passport, pack your luggage, and leave EVERYTHING else behind.
Just for comparison, the millionaires and the UMC only make up 5-15% of the population. I'm being generous here. I should also note that most of these people are without significant political clout. That doesn't mean that things are all hunky dory with the political class.
Item Three:
Now we get to the 800 pound Panda in the room, Xi Jinpooh. I would not be reporting this next bit except that I have seen very similar reports in THREE separate sources.
I am seeing reports that say Xi is increasing his "anti-corruption" pushes while indirectly threatening the senior military with talk of how important it is for the military to adhere more closely to the teachings of the CCP. To the military leadership, this sounds like threats of a purge if your loyalty to Xi is questioned.
I am seeing multiple reports of resistance to Xi forming within the senior military. The "Red Families", are siding with the military. The "Red Families" represent the children of the founders of the CCP & PRC. They are the primary beneficiaries of the cesspit of corruption that is the PRC government.
Where are things going from here? Your guess is as good as mine. Right now I am leaning more towards economic and societal implosion rather than explosion.
Every day that the PRC doesn't implode is a great gift that allows us (US) to rebuild our industrial infrastructure. My impression is that the next fifty years aren't going to be significantly worse than the past fifty years. That said, the best place, by far, to ride out the storm is going to be right here in the United States. Hands down!
WWG1WGA
Garde la Foi, mes amis! Nous nous sommes les sauveurs de la République! Maintenant et Toujours!
(Keep the Faith, my friends! We are the saviors of the Republic! Now and Forever!)
LonePalm, le Républicain du verre cassé (The Broken Glass Republican)