How Comrade Xi bungled China’s sinking economy

Welcome to the 10th edition of Between The Lines. This week we look at the meltdown engulfing China’s economy. Yes, it really is teetering on the brink. We also focus on Henry Kissinger’s trip to Beijing at the age of 100 and the Aspen “Speedo” spate. Let’s get started.

Take a bow President Xi Jinping. You have single-handedly bungled the economy and turned the “China Miracle” into the China Malaise.

Anyone with a rudimental knowledge of economics will realize that the country is facing an existential crisis after this week’s second-quarter data dump. 

Under Comrade Xi’s regime, “total government debt” is now an eye-watering US$23 trillion while the property sector is hooked on life support after the dramatic collapse of Evergrande. Wages have stagnated and one in five young people are unemployed.

Cue Gordon G Chang, the author of The Coming Collapse of China: 

It is now almost impossible for Chinese ruler Xi Jinping to fix the situation. Unfortunately, he reveres Mao Zedong and is opting for Mao’s totalitarian approach to the economy. 

“Xi’s Mao-like plan is to assault foreign companies and issue impossible-to-believe statistics to convince everyone that the situation is dandy. When it comes, the failure of China will undoubtedly be the biggest crash in history,” Chan said in a commentary for Newsweek.

Even the “standard playbook” to stimulate growth by juicing the economy with massive infrastructure spending will not solve the problem. In fact, it will only add to China’s debt tsunami washing over the nation.

Kissinger encounters an age-old challenge

Legendary diplomat Henry Kissinger first accompanied then-US President Richard Nixon to China in 1972 as his secretary of state.

More than 50 years later, he was back in Beijing at the age of 100 for a cozy chat with the Communist Party’s top diplomat Wang Yi, a youthful 69-year-old.

Since leaving officer, the elder statesman has “grown wealthy advising businesses on China and has warned against a hawkish turn in American policy,” the Agence France-Presse or AFP news organization reported this week.

But his close ties with Beijing appear to go only so far when it comes to the Party’s rocky relationship with the United States. Wang made that perfectly clear in typical “Wolf Warrior” rhetoric when he told Kissinger:

China’s development has strong endogenous momentum and inevitable historical logic, and it is impossible to try to transform China. It is even more impossible to encircle and contain China.

“The US policy toward China needs Kissinger-style diplomatic wisdom and Nixon-style political courage,” he added in a move to flatter the old man as reported by state-run Global Times.

Just in case Wang missed the flash, those days are gone, consigned to a black-and-white past, and Beijing knows it.

Speedos and the Silicon Curtain in Aspen

China’s ambassador to Washington Xie Feng has a distinctive turn of phrase. He literally waded into the Sino-American trade war by conjuring images of swimwear.

Speaking at the Aspen Security Forum in Colorado on Wednesday, Xie warned the US not to tighten high-tech sanctions on Beijing. He also made it clear that China would retaliate against more curbs on its semiconductor or chip sector.

News agency Reuters picked up the story, quoting Xie as saying:

This is like … restricting the other side to wear outdated swimwear in a swimming contest, while you [are] wearing a Speedo.

“The Chinese government cannot simply sit idly by. There’s a Chinese saying that we will not … make provocations, but we will not flinch from provocations,” he added.

Xie was referring to reports that Washington is planning to ban state-of-the-art AI chip sales to the world’s second-largest economy.  

“China, definitely … will make [a] response. But we don’t want … a trade war, technological war, we want to say goodbye to the Iron Curtain as well as the Silicon Curtain,” he said, jumping into the diplomatic deep end.