China in 2023: Xi doubles down on his “struggle”

Beijing [China]: Throughout 2023, China struggled to emerge from under COVID-19’s shadow, after the Chinese Communist Party (CCP) inexplicably reversed course on its policy of draconian lockdowns at the end of 2022.

Nobody really knows how many died in the explosive surge in COVID infections, but the predictive science intelligence company Airfinity estimated the death toll as between 1.3 and 2.1 million.

China proved highly efficient at controlling its population during the pandemic, but it could not prevent a grassroots sense of frustration with the authorities from developing. Even messianic Xi Jinping cannot eliminate this discontent with his pithy sayings, promises and remonstrations to “struggle” against “dangerous storms”.

Maintaining a COVID-elimination policy far longer than any other country in the world was a major achievement by the CCP, but it was not a viable long-term strategy. Individuals and the economy suffered terribly, and an economic slump made itself felt throughout 2023.

Chinese exports are flagging (in June, year-on-year exports had slumped 12.4 per cent), debt is at record levels and the property sector crisis has deepened further. In fact, house sales are just half what they were in December 2020, and 60-80 million apartments lie empty across the nation. Government efforts have not propped up sagging business or consumer confidence either.

A foreign investment deficit of USD 11.8 billion occurred from July-September, the first time foreign businesses withdrew more money from China than they invested. Xi’s anti-espionage and national security laws are partly to blame as he creates communist totalitarianism.

Youth unemployment is staggering too. Midyear data showed unemployment amongst 16-24-year-olds was 21.3 per cent, double that of four years ago. However, the situation is far worse, for in China a person is considered gainfully employed even if they work only one hour per week! Nor does this figure include young people in rural areas.

Some believe China’s actual youth unemployment rate is as high as 50 per cent. The best Xi offers China’s youth are epithets such as “endure hardships” and “eat bitterness”.

An examination of stock markets is also illuminating. Total returns for the past decade on Standard & Poor’s SPDR S&P 500 Trust ETF (which tracks the S&P 500 stock market index in the USA) amounted to a positive gain of 213 per cent. By comparison, over the same period, the iShares China Large-Cap ETF (investment results of an index of large capitalization Chinese equities trading on the Hong Kong Stock Exchange) registered a plunge of -21.08 per cent.

With deep-seated economic structural issues, a rapidly ageing population amidst a declining birthrate, and Xi’s fanatical policy of centralising political power, it is no wonder that President Joe Biden described China’s economy as a “ticking time bomb”.

The coming year should bring a continued slowdown, as Xi makes China an increasingly unattractive proposition for investment. Xi has eschewed collective decision-making, as he amasses power and blurs the lines between state and party. Xi floated the Belt and Road Initiative (BRI) in 2013, but a decade later, it is suffering from economic malaise. After the BRI peaked in 2018, it has had to tighten its belt.

China announced three vague new initiatives in 2021-22 – the Global Data Security Initiative, Global Development Initiative and Global Security Initiative – that are directed at gaining greater influence over the Global South, accelerating the perception of US decline, and promoting China’s perspective of international order.

On a rare positive note for Xi, he successfully negotiated the awkward death of former premier Li Keqiang on October 27. Li represented an opposing faction, the Communist Youth League.

Regardless, China’s response to COVID and the CCP’s inability to provide solutions to a generation unused to hard times has taken the gloss off Xi’s popularity since his high-tide coronation into a third term at the 20th National Congress in October 2022. At the same event, Xi installed an unprecedented number of his own men in the corridors of power, and his position as paramount leader seemed impregnable.

However, his ability to discern the character of his proteges proved fallible in 2023, as one after another disappeared from public view into oblivion. First, there was Foreign Minister Qin Gang, followed by Defense Minister Li Shangfu. Also to fall victim were commander General Li Yuchao and political commissar General Liu Guangbin of the People’s Liberation Army (PLA) Rocket Force. The PLARF’s leadership has been decimated, with perhaps 70 officers arrested to date, so it is difficult to conceive how Xi has any confidence in this force in charge of his strategic weapons.

China continues to pretend neutrality over Tsar Vladimir Putin’s invasion of Ukraine. There have been limited examples of Chinese companies supplying combat equipment to Russia, but its support has been tangible in other ways. For instance, China and Hong Kong supplied 85 per cent of Russia’s imported computer chips from March 2022 till September 2023.

Beijing released “China’s Position on the Political Settlement of the Ukraine Crisis” on February 24. However, it was not a peace plan but rather an ideological regurgitation that was hypocritical in places. For example, “The security of a country should not be pursued at the expense of others,” China proclaimed, yet Xi obviously declined to tell his friend Putin that.

Hong Kong’s National Security Law, passed on June 30, 2020, has successfully stifled all forms of protest or political self-expression in the former British colony. To date, 285 Hong Kongers have been convicted of crimes under this ambiguous law that gives the authorities an unlimited mandate to suppress free speech. Furthermore, within just four years, Hong Kong went from its highest-ever voter turnout in local district elections to its lowest ever. In 2019, 71.2 per cent of the population turned out to vote mostly for pro-democracy candidates, but elections on December 10, 2023 attracted just 27.54 per cent of voters.

Much of China’s predicament is due to its own actions. Take the case of its high-altitude surveillance balloon program, for instance. Relations with the USA reached new lows after an F-22A fighter shot down a Chinese balloon on February 5 after it had loitered over sensitive nuclear sites in Montana. The Pentagon noted: “We spoke directly with Chinese officials through multiple channels, but rather than address their intrusion into our airspace, the PRC put out an explanation that lacked any credibility.”

It turned out that this was not an isolated incident either; the Pentagon explained that five Chinese balloons are known to have circumnavigated the globe, conducting some 20-30 missions over the past decade. Caught with its hand in the cookie jar, China lashed out at those who had apprehended it.

China continues to invest heavily in the PLA. Announcing its defense budget on March 5, China allocated CNY1.5537 trillion (USD 224.59 billion) to the military, a 7.2 per cent rise compared to the preceding year. Despite all its economic headwinds, this represented the largest percentage increase in the past four years.

China’s nuclear weapon arsenal is receiving an incredible boost in size too. According to the Pentagon, in 2022 the PLARF had an estimated 400 nuclear warheads, but this had already risen to more than 500 as of May 2023. Furthermore, China’s operational nuclear warhead inventory is predicted to snowball to more than 1,000 by 2030, plus the PLARF is shifting toward “higher readiness levels” for its strategic weapons.

The threat to Taiwan has sharpened too, with the PLA maintaining an even more belligerent stance after Nancy Pelosi visited Taipei in August 2022. The PLA has maintained a high tempo of aircraft intrusions into Taiwan’s air defense identification zone, along the way establishing a new baseline for such coercive activities as Beijing tightens the psychological screws. With Taiwan citizens heading to presidential polls on January 13, 2024, China has been upping the ante.

As an example of this pressure, Lieutenant General He Lei, former vice president of the PLA Academy of Military Sciences, blatantly threatened Taiwan in October: “Once the Chinese government is forced to use force to resolve the Taiwan question, it will be a war for reunification, a just and legitimate war supported and participated in by the Chinese people, and a war to crush foreign interference.” Yet Taiwan people do not wish to unite with China in what would not be reunification, but rather annexation or colonialism.

China has continued to exert stronger pressure in the South China Sea too. The Philippines has been on the receiving end of some harsh treatment, as Xi expresses his displeasure with the government’s firmer stance on preserving Philippine territorial interests. In particular, it has used greater force – including ramming, water cannons and swarming vessels – to dissuade the Philippines from resupplying troops garrisoned on a naval vessel beached on Second Thomas Shoal.

The Philippines, and allies like Australia and the USA, are using publicity more effectively to highlight China’s reckless actions. For example, a Chinese J-11 fighter flew perilously close to a B-52 bomber over the South China Sea in October, while Australian naval divers were injured by a Chinese warship deliberately using sonar against them in waters near Japan in November.

The more China spreads its influence, the more it opens itself up to the charge of imperialism. It constantly accuses the USA of “hegemony” and harboring a “Cold War mentality”, when in fact China is a deliberate disruptor, routinely crossing the boundary between legitimate and illegal use of force.

A sullen China refused any communication between the PLA and the American military. Admiral John Aquilino, head of the US Indo-Pacific Command, complained earlier this year: “I have not yet received a response for a year and a half to accept my request for a conversation. I’ve not received a ‘no.’ I’ve not received a ‘wait, could we adjust?’ I’ve just received no answer.” When Biden met Xi in San Francisco in November, Beijing finally acceded to a renewal of communications.

2023 demonstrated the world’s volatility in places like the Middle East, though China has always been expert at seizing unexpected opportunities to advance its cause.

Unfortunately, China’s aims are vastly different to those of the democratic West, and too many still fail to realize that. One such person was French President Emmanuel Macron, who visited China in April. Reveling in a rock star welcome, Macron ably reinforced Xi’s talking points with comments like this: “The question Europeans need to answer…is it in our interest to accelerate [a crisis] on Taiwan? No. The worse thing would be to think that we Europeans must become followers on this topic and take our cue from the US agenda and a Chinese overreaction.”

Xi’s goals include dividing European unity and driving a wedge between Europe and the USA. Xi would have gleefully rubbed his hands when Macron said, “Europeans cannot resolve the crisis in Ukraine; how can we credibly say on Taiwan, ‘Watch out, if you do something wrong we will be there’? If you really want to increase tensions, that’s the way to do it.” China wants to defeat Taiwan without a shot being fired, and Macron’s acquiescence is precisely what Xi wants, for the West to throw up its hands and surrender Taiwan to Chinese machinations.

In the annual “Threat Assessment of the US Intelligence Community”, released by the Office of the Director of National Intelligence in February, the conclusion was this: “The CCP will continue efforts to achieve President Xi Jinping’s vision of making China the preeminent power in East Asia and a major power on the world stage.

As Xi begins his third term as China’s leader, the CCP will work to press Taiwan on unification, undercut US influence, drive wedges between Washington and its partners, and foster some norms that favor its authoritarian system.”

Indeed, Beijing sees competitive US-China relations as part of an epochal geopolitical shift. It views Washington’s diplomatic, economic, military and technological measures against Beijing as part of a broader US effort to contain China. Consequently, Beijing is increasingly combining growing military power with its economic, technological and diplomatic influence to strengthen CCP rule, grab territory and regional preeminence, and to pursue global influence.

However, China faces myriad domestic and international challenges that are hindering Xi’s ambitions. Like the emperor with no clothes, it is evident to many that Xi will do almost anything to consolidate power and fulfil his destiny. One only hopes that he will not miscalculate in 2024 as he reacts to these growing pressures and constraints.