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Tea Leaves

The Chinese Kaleidoscope

Where is China actually headed?

“Let China sleep,” Napoleon Bonaparte is supposed to have advised, “for when she wakes, she will shake the world.” The current president of China, Xi Jinping, has made no secret of his ambition for China to dominate the world. In the 1950s, America’s dominance of the automobile industry signified its manufacturing and economic preeminence. China has surpassed the United States in the manufacture of electric vehicles, whose mechanisms will eventually replace the internal combustion engine worldwide.

China is currently struggling, however, with high youth unemployment, and young, educated Chinese are accepting blue-collar work or moving to the countryside, which will retard China’s goal of becoming a consumer economy. More than one in five young people are unemployed. Chinese youth fear the “Curse of 35,” at which age you are too old to be hired, but way too young to retire. China’s attempt to organize a challenge to America’s and Europe’s financial dominance with a consortium of BRICS countries, headquartered in an ostentatious skyscraper in Shanghai, has come a cropper, and one of the nation’s two banks has been accused by its former global head of communications of being controlled by the Chinese Communist Party (CCP). China’s currency, the yuan, has plummeted to a near 15-year low. Chinese authorities have considered launching a major export drive to revive the flagging economy, but they fear a hostile reaction from trading partners that are already under pressure from massive Chinese exports. In 2021, Xi declared a “comprehensive victory in the battle against poverty,” but Chinese authorities are now cracking down on visual media showing how much abject poverty still lingers in the countryside. Some Chinese brands, to avoid association with Beijing, have moved offshore. Shein, headquartered in Singapore and originally simply a fashion retailer, is now challenging Amazon for the position of the world’s largest online retailer.

China was a poverty-ridden country from before the CCP took power in 1949 until Deng Xiaoping acceded to national leadership in 1978. Deng concluded that China needed more of a market economy than the strictly hierarchical, top-down command economy established by Mao Zedong. He also believed that China needed to open itself to investment from the outside world. Under Deng and his immediate successors, China developed the second-largest economy in the world, and after Xi acceded to the position of president in 2012, China’s economic growth continued apace. However, it began to become clear that Xi was not as much of an enthusiast about capitalist markets as his immediate predecessors. In fact, he proclaimed his intention to follow Mao’s footsteps and revive the pursuit of a stronger socialism in China, which he defines as “socialism with Chinese characteristics.” The near-total Covid-19 lockdown he imposed on his citizens for almost three years seems to have been a dividing point for his regime: People emerged from their homes furious about this protracted confinement, and the Chinese economy has yet to show any signs of significant recovery. For a while, there were street demonstrations in major cities demanding Xi’s resignation.

Ruan Xiaohuan, a computer programmer in Shanghai who for 12 years wrote an anonymous blog ridiculing the foibles and corruption of the CCP, has been arrested and sentenced to seven years in prison. Hong Kong has set a bounty on dissidents who have fled overseas and has threatened to “pursue them for life.” China has created an armada of coast guard vessels that rival in size and capability those of actual naval ships, and countries that fear Chinese aggression on the high seas are rushing to build and deploy robust and heavily armed patrol boats of their own. It has been speculated that one area where the Chinese might deploy such ships is in the straits surrounding the island of Taiwan, which China claims as its own. China’s distant-water fishing fleet of approximately 10,000 vessels is rapidly depleting fish stocks worldwide, especially those of coastal communities that rely on them for sustenance, and the fleet is believed to have been fashioned to serve military as well as commercial purposes. Not too long after the Chinese government lifted its severe Covid-19 restrictions and announced to the world that it was open for business again, it commenced a series of intrusive raids on American and other foreign consulting firms in China that perform due diligence research for Western companies doing business or contemplating doing business in the country.

There was a clear gulf between the national government of China, which had obviously come to perceive the presence of foreign companies in China as a potential threat to the nation’s security, and local governments—many of them deeply in the red financially—desperate for Western investment. Xi, it is well-known, sees the world in terms of a potentially deadly struggle for global supremacy between the United States and China and perceives various U.S. actions—such as denying China access to the most advanced computer chips—in this context. Meanwhile, China was caught creating a spy station on the island of Cuba that will enable it to listen in on private communications throughout the U.S. Southeast. China has also been playing a notable role in Canadian politics, using its influence in Chinese communities there to defeat Chinese Canadian politicians who are critical of Chinese Communist Party actions such as the crackdown on Hong Kong or mistreatment of Muslim Uighurs in Xinjiang region.

The recent visits to China by American diplomats—Secretary of State Antony Blinken, Secretary of the Treasury Janet Yellen, and Special Presidential Envoy for Climate John Kerry—have had mixed reports of success, but Kerry’s may have been the most important of the three. While he was there, the temperature in western China reached 126 degrees Fahrenheit.