All About the Chinese Marathon, Grey Rhinos and the Heist
- July 6, 2023
- Posted by: admin
- Category: China
By Lt Gen P R Shankar (R)
As per Zhou Xin’s opinion in SCMP, three Grey Rhinos–demographic crisis, debt and decoupling are growing steadily and threatening economic growth in China.
Published in The Financial Express @ https://www.financialexpress.com/business/defence-all-about-the-chinese-marathon-grey-rhinos-and-the-heist-3110186/
China is running the “Hundred Year Marathon” with a “Secret Strategy to Replace America as the Global Superpower”. That’s what Michael Pillsbury tells us in his widely read book. Many of us lap it up as God’s gospel. As per Zhou Xin’s opinion in SCMP, three Grey Rhinos–demographic crisis, debt and decoupling are growing steadily and threatening economic growth in China. I will take Zhou seriously since he is Chinese and he knows his home country’s situation better. Also, there is a lot of corroborative evidence and analysis about what Zhou says. Thirdly, even Xi Jinping spoke of the likelihood of Grey Rhino and Black Swan events during the 20th Party Congress. Zhou is only outlining the Grey Rhinos to present a stark picture of China. Things must be bad. In fact they are when articles whisper about “deflation’. Advertisement
That Xi and China are running the superpower marathon is well known and established. However they need to outpace three Grey Rhinos which are gaining speed and dodge any Black Swan which can swoop down on it. How that race is panning out and what does it portend for India is the issue which needs examination. By the way, for those not familiar, a grey rhino event is one of high probability with a high-impact threat. Let’s talk of Zhous’ three grey rhinos.
The first grey rhino is China’s birth rate which is falling off a cliff. It has become more menacing than expected since the time it was merrily swept under the carpet by routine CCP lies. Demographic decline has surfaced a decade in advance at top rhino speed. What’s more, this overweight rhino has no brakes! If the rumour, that the number of births could be below 8 million this year, comes true, then the Chinese might be shocked into national gloom and stop eating noodles. China is in a long time low-fertility trap designed by good old Deng. China’s demographic dividend hereafter, is a rapidly aging population and shrinking workforce. This became increasingly evident as China’s growth started losing momentumin 2010. However it remained hidden by communist propaganda. The problem is out in the open now and will only get worse in future. The latest CCP canard is that China will continue to reap the “Talent Dividend” due to better education, culture, discipline, blah, blah of its population. But that is an afterthought and a typical communist propaganda being drummed out.
The second grey rhino is debt. The days of debt fuelled, infrastructure driven, manufacturing and export oriented growth are firmly in the past as the economy stalls. Zhou feels that government, corporate and household debts are above 300% of national GDP. Hence, China may finally have to face the consequences of overborrowing. At the core is the hyperinflated real estate sector in slow melt down mode. Most Chinese households have borrowed heavily to buy property. Their burden has become heavier since incomes have reduced, lay-offs from high-end jobs have increased and youth remain jobless. What is worse, the property on which they took loans is steadily losing value. Most local governments are unable to repay debts incurred by them. They are cutting down on public services. Their financial vehicles to manage land, debt and other contracts are in a collapse mode. However, the strange part is that despite all this, many cities continue to take on more debts to fund infrastructure they do not need! Debt seems to be a Chinese national addiction.
The third grey rhino is decoupling or derisking or friendshoring or whatever it is called. China’s exports are facing strong geopolitical headwinds. The famed Chinese manufacturing ecology is under stress with factory closures, lack of orders and declining exports. With the collapse of globalisation, China will have to prepare for a painful future where it will no longer be accommodated by many countries. On the other hand, it will have to face suspicion and resistance. This irreversible process is progressing steadily. Wall Street Journal also mentions that “China’s era of rapid growth is over. Its recovery from zero-Covid is stalling. And now the country is facing deep, structural problems in its economy”. Further, China’s appeal as a destination for foreign firms is waning. FDI into China has dipped by 48% in 2022 compared to 2021. The third rhino is steadily gaining weight!
Amidst all these Grey Rhinos, a Black Swan could be lurking round the corner – Climate Change. The news of climate change and its effect emanating from Chinese media is increasing in recent times. A drought here and crop damage there is coming up more often than before. Is the black swan on the horizon?
What is China’s response to the unfolding “animal kingdom” events? The emphasis has shifted from an obsession with GDP to security, science, technology and diplomacy on the global stage. Xi speaks of “open cooperation for a shared future” which will focus on the “frontiers of science and technology development”, including artificial intelligence (AI) in specially curated conferences. These are meant to woo global scientists to work jointly with China in a “win-win strategy of opening-up”. There are few takers. Xi is continuing China’s marathon through stepped up diplomacy, enhanced security/ military and a huge technology bump up. Chinese are busy conducting AI based wargames with hypersonic systems which can sink a carrier based fleet or have grandiose plans to double their rocket launch capacity to deploy a ‘giant satellite constellation’ above Starlink or busy hacking the US Navy networks to disrupt communications in the Pacific region. Xi has also established a commission which will coordinate and promote the creation of a “national innovation system”, to examine major strategies for the hi tech and science sector. It will also determine national strategic science and technology tasks and major research projects, and advance development of military-civilian technology. The military technology marathon is fully on and is being run at top speed with maximum investments! Xi ji is betting big on science, technology and the military to deliver what standard economics cannot. It is a science called Xiconomics. It has failed China consistently.
After the diplomatic success brokering the Iran – Saudi deal, Xi has set his sights higher. He has nominated a special envoy to mediate and end the Ukraine war. Promptly, the EU members have told the envoy that to expect normalisation of EU-China relations, China will have to tell its pal Putin to pull out from Ukraine and end the war. Presently, that seems to be a faraway milestone to achieve. It is a marathon within a marathon. Xi Jinping is also going big on his global initiatives on security , development and civilisation. The overall effort is that Xi wants to leverage China’s military-technological prowess and diplomatic success to fill up the gaps appearing in the economy. Simultaneously he is apparently establishing a Sino centric order through his global initiatives.
The question is that where does it leave India? I will get to that shortly since I need to detour into Taiwan first. There are recent reports that suggest that the Chinese are soft pedalling on a cross strait operation to annex Taiwan. Further, all of a sudden they have started talking of four fronts that they are facing. Their “rejuvenation of the Chinese dream” option through the military route is not that attractive anymore. Maybe they find the waters of the Taiwan Strait too cold for their dainty feet. However they are super sizing their nuclear force and investing into their military. All this effort needs a victory. Even a symbolic one at that is good enough. That is where India comes in and offers a glimmer of hope. If Xi’s boys can pull off even a small heist on the Himalayas and dislodge the Indian Army a wee bit, the deed is done and the marathon is back on course!
It will do well for us to remember that India has been going up the International trend charts these days at the expense of China. It is getting stronger by the day. In fact the day is not far when India will be beyond China’s military capability, (in my opinion that has occurred already, but some don’t believe it). Hence China has to move militarily before the window shuts permanently. Further, Xi is set to visit India in Sep for the G20 meet. That’s dreadful. Whenever Xi has met our PM or come to India, it has resulted in a “jhadap” on the LAC. Can we expect anything less during Xi’s G20 visit? Imagine the international heist Xi inflicts if his PLA boys can get hold of a post(s) on the Himalayas when he is doing the “pappi-jhappi” routine in Delhi! That is what the Indian Army must safeguard against. We need to seriously think if we can use the next opportunity which Xi provides to send our Agniveers across to occupy a Tibetan rock or two.
Of course the lesser variant is that China can dream of a nine dash line kind of a story to kickstart their claim on some part of the IOR as part of their marathon. Talking of Nine Dash lines…I remember reading somewhere in the Ramayana about Hanumanji practicing long jumps between Islands before his final leap of faith across and into Lanka. When I dug into our scriptures it emerged that he was doing his practice jumps across a gap of “Ten Degrees” …you know the one between the Andaman and Nicobar group of Islands. I remember reading about it very vividly…Hence based on our certified historical scriptures we must lay claim to the Ten Degree channel. After all, if China can claim the entire South China Sea based on the fertile imagination of the Nine Dash Line, we can take a leaf out of their book and declare the Ten Degree Channel as sovereign to India. You know what…? If I continue like this … .the 100 year marathon runner might have apoplexy…