The Impending Big War
Qiushi meaning "Seeking Truth" in Mandarin, is the name of a leading official journal and magazine of the Chinese Communist Party (CCP). In January of 2022 it published, Xi Jinping's supposed secret speech 60 days roughly after it was given, and for the first time, Xi himself was quoted as saying “prepare for struggle against hostile forces” of course without naming United States of America & allies. The publication of Xi’s quote from his speech in CCP’s propaganda magazine Qiushi is no aberration or leak considering nearly two thirds of articles published in said magazine are authored by senior officials and provincial level leaders of CCP. The publication of Xi’s explicit and to some degree provocative challenge to US is a culmination of well thought out strategy that has been set in motion since 2015. And unlike verbal rhetoric or bravado for political purposes that we witness in South Asia and elsewhere, Xi Jinping’s speech was measured, timed, and preceded with multiyear planning and implementation.
Shift in China’s Defence Spending & Priorities
Recent research by Jacqueline N. Deal and Michael Mort of Long
Term Strategy Group, a Washington, D.C.-based defense consultancy, show People’s
Liberation Army of China’s (PLA) budget has been misleading for almost a
decade, especially since 2015. They estimate China’s military spending grew
nearly twice as fast as China’s official figures as shown against GDP. The team
used open-source and observable outputs in major categories including
procurement, personnel, and operations and maintenance to determine an estimate
of actual defense spending of PLA. Over the last decade China serially produced
more new ships, submarine, airplanes, missiles, ordnance and other weapon
systems while not reflecting the spend in budget data. As per Pentagon’s 2022
China Military Power Report state that the People’s Liberation Army Navy (PLAN) surpassed
the US Navy in fleet size in 2020 and now has around 340 warships, with
projection to grow to 400 ships in the next couple years. The number of Intercontinental
Ballistic Missile launchers reported by the Pentagon went from 100 missile
silos and launchers in 2020 to 450 by October 2022, a whopping 350% increase in
18 months and growing. Similar work is ongoing with Submarines, both in terms
of modernization and numbers, it is estimated by 2030 China would have 76
submarines. US defence budget is thrice that of China but US is estimated to
have under 70 submarines.
As Patalano, professor of war and strategy at King’s College
in London rightly points out - “in naval war, attrition of Naval assets is a
real thing, so the ability to replace is vital” and China has 11 shipyards
working 24x7 in three shifts churning out Naval assets to pre-empt future
depletion in a potential war.
Certainly, consider that there are additional expenditures in areas like research, clandestine facilities, and the expansion of China's nuclear capabilities through the PLA's Rocket Force, among others. These expenditures are not easily quantifiable. It's worth noting that China is presently operating a record number of military satellites, surpassing the United States in this regard.
An obvious question that arises for defense analysts is whether China is gearing up for actual conflict or engaging in strategic posturing commensurate with its economic status. To delve deeper into this matter, let's investigate whether the defense expenditure is a peculiarity or if we can discern noteworthy strategic and tactical shifts in other areas too.
New Legislation and Fiscal Policy
CCP has been watching Russia’s invasion of Ukraine very
diligently, especially the Western response, its material support to Ukraine and crippling economic & financial sanctions against Russia. Xi
Jinping since 2020 has embarked on a process of making tactical changes in
various areas including legislation, banking, economy, health sector, disaster
management and citizen response, as well in deployment of PLA.
For instance, in January of 2020, China updated its foreign
investment law, giving Beijing the power to nationalize foreign assets under
special circumstances, including war. This was followed by passing a new
counter-foreign sanctions law in June of 2021, enabling Beijing to seize
corporate assets and detain expat employees if they complied with foreign
sanctions. That is - if either the United States or Europe imposed sanctions on
China, and the corporations from these regions adhered to their own sanctions,
China would have the authority to seize assets and detain foreign individuals.
Sometime around May of 2022, Xi Jinping “asked” overseas Chinese nationals to
divest their assets and repatriate foreign capital back to China. While there
is no evidence if that appeal succeeded but since the past decade China has
been targeting individual Chinese expats working in large defence firms in West
with expertise in key technologies such as Airplane manufacturing, Nuclear
Physics, Semiconductor manufacturing, Artificial intelligence, etc and nudging,
enticing them to return home and help establish Chinese dominance in those
sectors.
Again, in June of 2023 China expanded the counter-foreign
sanction law creating obligations and responsibilities for Chinese companies to
adhere to Chinese government even when operating under foreign areas. During
the same period, China passed a new law to promote patriotic education not just
for school children’s but also for internet users and wait for it – overseas
Chinese.
In May of 2022, Xi ordered Chinese banking system to assess
risk and prepare, insulate against severe Western sanctions. This statement was
followed by consistent reduction in holdings of US Treasury bonds, especially
in the past three consecutive month to $835.4 billion, dropping to a 14-year
low, as per data from the US Treasury Department in June 2023. China remains
the second-largest holder of US Treasury bonds after Japan, but it has kept
levels under $1 trillion since mid-2022. Holdings were cut all through from
mid-2022 until mid-2023 and I anticipate this trend to continue, possibly expediting further in 2024-2025 period.
A recent article from Global Times, the Chinese government’s
English propaganda arm, quoted an unnamed CCP source saying, “China's reduction
(in US Treasury bonds) is a long-term strategy, and the US has helped cause
this trend with its irresponsible policies, which will eventually backfire (for
US)”.
Take a moment to consider the timelines and strategic shifts
undertaken by China within a span of a few years. These changes encompass
alterations in legislation, adjustments in banking practices, shifts in fiscal
policies, and public pronouncements. What becomes evident is a determined Xi
Jinping actively seeking to safeguard his economy and reserves against
potential severe sanctions for his planned invasion of Taiwan.
Energy and Food Security
China is today the largest importer of crude oil and LNG. It
imports approx. 14 million barrels of crude a day and 8 bullion cubic feet of
LNG. Securing the flow of crude and LNG is crucial for China since bulk of the
imports come from Middle East and Africa. Russia services approximately 15-20% of
energy needs to China. With Russia firmly in China’s camp, Xi Jinping have a
desperate need to secure relationship with Saudis and Iran as he attempts to
sanction proof China’s economy. This lacuna in energy security explains Xi
Jinping’s two pronged action: One, personally flying in a plane to broker rapprochement
between Sunni-Saudia and Shia-Iran few months back. Two, creating world’s
largest blue water navy by churning of Naval ships and submarines, non-stop,
in-order to secure crucial energy supply chain passing through Malacca Strait.
But Xi Jinping anticipates Middle East to play both sides,
unlike Russia. Therefore, China is planning three moves ahead and have begun
increasing not just crude oil stocks, but also its petroleum product stocks,
particularly diesel. Further, China has started to aggressively import coal. In
2023, it’s estimated that China will import and stock nearly 400million tonnes
of coal. Simultaneously the Chinese local government has permitted, as per one
estimate, 106GW of new coal power plants – essentially 100 large coal fired
power plants. Going back to the cheapest and dirtiest form of energy (coal) by
a country with second largest economy and relatively strong relations with top
energy supplying nations is definite indication of future conflict.
Furthermore, according to the U.S. Department of
Agriculture, China will have 65% of the world’s corn by 2023 and a record 53%
of the world’s wheat which is abnormal considering China has worlds 20% of
population. Year of year, China increased its import of Wheat & Corn by
30%+, Barley/ Pork 50%+ and Sugar by 60%+ as per data from China’s Custom
Department. Interestingly, unlike his counter part in India who made provision
for free food grains for nearly 800million people since COVID, Xi Jinping did
not authorise opening of food grain stockpile even when COVID rampaged China in
2021 – why? Unless one is anticipating an even greater calamity.
Wargaming For Taiwan Invasion
In June of 2022, Xi Jinping outlined plan classifying
operations against Taiwan as “armed forces operations”, essentially legitimizing
Taiwan invasion as an internal matter of China rather than a war. This was a
copycat version of how Vladimir Putin categorized invasion of Crimea,
indicating the CCP is taking notes from Russia’s invasion of Ukraine and employing
similar terminology. Further during the 20th Chinese Community Party
Congress session in October 2022, Xi made two critical observations – One, the
need for Chinese nation to “prepare for high winds, waves and even stormy
seas”. Two, Xi emphasized that “Taiwan’s refusal of China’s legitimate demand
to reunify could be ground for invasion”. Keep in mind Putin made similar
statements and followed up with attack on Ukraine. Xi Jinping, comparably to
Putin, is telling the world what he intends to do, backed up with preparations
on how he wants to do.
Recently in July 2023, just as US treasury Janet Yellen
arrived in China, Xi Jinping made it a point to visit the Eastern Military
Command which oversees Taiwan region, declaring them to “prepare for war”. The
timing and the directness of the message was meant for the United States, and
it cannot be overlooked.
In 2023, China has already
carried out three military exercises. First drill was carried out in April of
2023, named Operation Joint Sword focusing on rapid domination in air, seas,
and information. This was followed up with military exercise to handle large
scale power outages in Eastern Region adjacent to Taiwan Strait. And the third
one this year in September of 2023, deploying an aircraft carrier and 20 naval
ships and 68 warplanes in a major show of force aimed at blockading Taiwan and
conducting sustained air raids. Also in 2023, China built 18 air raid shelters in
This increase in intensity and frequency of military
exercises along with messaging & planning for disaster management - in my opinion, are no longer indicative rather
predictive of an upcoming invasion.
Economy and Demography
A recent Foreign Policy article rightly captured the Chinese
Communist Party’s intent with its headline “China Prefers Guns to Butter”. China
has witnessed a prolonged period of economic deceleration for nearly a decade now,
but Chinese Communist Party has refused to take steps to shift its economic
model into a more sustainable consumption driven one, instead it continued to pursue
two goals which clearly aren’t leading to economic revival – first, pouring significant
resources towards strengthening its military and second, attempting to
nationalize and breakdown large private corporations such as Ali Baba into
smaller manageable pieces. Xi Jinping seems to be adamant, even at the cost of economic
growth, to rollback decades of gains made by Deng Xiaoping shift towards
“capitalism” and friendly relations with West. Xi seems to be following in the
footsteps of Mao Zedong who unleashed the disastrous “Great Leap” causing millions
of Chinese deaths. And in this chain of economic missteps Xi led China wreaked
havoc first by fuelling property bubble and subsequently responding without
alacrity and insufficiency to the real estate crisis. China’s property sector
is continuing its yearslong crisis, as giant property developers risk default
and home prices continued to sink, perhaps by more than what official data
suggests. It’s important to note, real estate contributes about 30% of China's
GDP, which is unhealthy and atleast 3x incomparison to other large economies
such as U.S.
However, what is noteworthy is the manner in which Xi
Jinping is tackling the real estate crisis by having its large property corporations
default on Western investor bought dollar bonds while preserving local
investors. This goes to show in Xi’s calculation Chinese economy can survive
this investor scare or worst, he no longer cares for Western investment, which in
my opinion will be disastrous for Chinese economy.
Similar theme can be observed in aviation sector. Chinese
banks, not airline companies, over the past two decade have become the biggest
buyers of Airbus and Boeing airplanes. They essentially block orders with the
duopoly conglomerate, subsequently lease out aircrafts to entire Asia thus
dominating the leasing market. This strategy was in place for nearly two
decades until recently when they’ve decided to offload their order books in
return for dollars. For instance, China Aircraft Leasing Group (CALC) abandoned
plans to take 64 Boeing 737-8s, -9s and -10s, instead transferred the order to
Middle East lessor Dubai Aerospace Enterprise (DAE). This change in strategy is
well thought out plan to insulate Chinese economy and does indicate China
foresees relationship with West further descent.
The decoupling or de-risking from China, initially took
shape during President Trump’s tenure, who rightly identified dependency on
China and ballooning trade deficit as risk to U.S. economy, which since
covid pandemic been expedited by major Western capitals. China’s export fell
7.5% YoY in May’2023 and the slide continued in June’2023 with exports falling
worst-than-expected with a drop of 12% YoY.
U.S. import data also confirms this trend, with a notable drop in Chinese share of U.S. import dropping from 21% to 15% in a span of few years.
The economic crisis for China is only going to further
deepen in coming decades anticipating the demographic decline. China’s per-capita
income is around USD 12K and with deceleration in both economy and working
class age, China appears not to become a rich economy on par with West anytime
soon.
Irrational Act
Deng Xiaoping critically viewed China’s failure of socialist-communist model comparing it to Hong Kong's success as a model and
sought to leverage Hong Kong’s strengths, including its well-developed
financial sector and business-friendly environment.
Deng began with creating Special Economic Zones (SEZs) in
three cities of Guangdong Province bordering Hong Kong namely – Shenzhen,
Zhuhai & Shantou, encouraging enterprises in Hong Kong to invest and
replicate their success in mainland China. Deng Xiaoping, further, pursued a
more pragmatic and open foreign policy, normalizing relations with Western
countries, including the United States, reversing the ideological isolationist
policies of Mao Zedong, and embracing open trade and spirit of competitiveness.
Deng clearly saw danger in personality cult and totalitarian leadership like that of Mao Zedong and was instrumental in adding term limits for Chinese leaders to the country's constitution.
In the backdrop of tough lessons that Chinese learnt both in
failure of Mao’s policies and success with Deng’s approach, the intriguing
question to ask is – why China is behaving irrationally now?
Repeating Pattern
Xi Jinping’s father Xi Zhongxun was a revolutionary who
joined the Chinese Communist Party (CCP) in the early 1920s. He played a role
in the Red Army and took part in the Long March alongside Mao Zedong and other
Communist leaders. After the CCP's victory in the Chinese Civil War and the
establishment of the People's Republic of China in 1949, Xi Zhongxun held
various positions within the Party and the government. He served in leadership
roles in several provinces.
However, during the Cultural Revolution (1966-1976). Xi
Jinping’s father (Xi Zhongxun) was accused of being a "capitalist
roader" by Red Guards, a radical Maoist youth groups. Xi Zhongxun was publicly
criticized and subjected to struggle sessions, where he was forced to confess
to alleged "crimes" and "bourgeois tendencies." According
to an authoritative account, Xi family's home in Beijing was ransacked, and
their possessions were confiscated or destroyed. Xi Jinping then as young teen endured
the trauma of humiliation of his family being struck with pebbles in the
streets.
Xi Zhongxun was removed from his official positions and sent
to perform forced labour in Liangjiahe, a rural village in Shaanxi Province. He
was assigned to do manual agricultural work. Then only 15 years old, Xi Jinping,
was separated from his family and was also sent to work in the countryside as part
of the Communist Party's policy to "re-educate" urban youth by having
them engage in manual labour in harsh conditions.
Childhood trauma, including experiences of humiliation,
separation from family, physical abuse, and insults, can have profound and long-lasting
effects on a person's emotional, psychological, and social well-being
throughout their adult life. Such episodes can undermine an individual's sense
of self-worth and self-esteem. They may develop negative self-beliefs and
feelings of shame or guilt, particularly if they were subjected to humiliation
or blame as children. Does this explain why CCP’s famous “wolf warrior” and the
current Foreign Minister Wang Yi is rumoured to made to write a self-criticism
letter, because at the BRICS Summit 2023 Xi
Jinping's interpreter was blocked by security personnel, leading to supposedly a “highly embarrassing” moment for Lord Xi? Does it also explain why Xi is unforgiving
when it was discovered that the former Foreign Minister Qin Gang and Xi
Jinping’s most loyal man, who was so attentive that he would count the steps of
the museum staircases during Xi's overseas visits, had an affair with a TV
presenter.
Psychologists claim that adults who experienced childhood
trauma may struggle with forming and maintaining healthy relationships. They
may have trust issues, difficulty with emotional intimacy, and fear of
abandonment due to early experiences of separation or betrayal. Does this
explain the “great purge” carried out by Xi when more than 170 ministers and
deputy minister-level officials were sacked and many jailed, accused of
charges such as corruption, misconduct, and violation of party discipline. As
recently as July 2023, the leadership of China’s Rocket Force, the army unit
that oversees its nuclear arsenal, was replaced. Its former commander, Li
Yuchao, went missing from public without explanation.
During the 20th Party Congress in October 2022,
we remember how Xi humiliated senior party veteran Hu Jintao and had him removed from
the party chair quite literally. But what many observers missed during the
session was how Xi replaced China’s head of Fiscal Policy, Treasury, Banking
with people from Missile Unit, indicating - total loyalty triumphs talent and expertise. The party congress further noted in resolution “The
congress calls on all party members to acquire a deep understanding of the
decisive significance of establishing comrade Xi Jinping’s core position on the
party Central Committee and in the party as a whole and establishing the
guiding role of Xi Jinping Thought,” The key operative word is “Xi
Jinping’s Thought”, essentially meaning the 376 central committee members and
98 million members of CCP must align to Xi Jinping’s wishes, standards and
demands.
Psychologist also claim, adults who experienced trauma
during their childhood may develop a strong desire for control and order in
their adult lives. This can manifest as autocratic or controlling behaviour,
especially in situations where they feel vulnerable. I believe we are
witnessing a repeating pattern with Xi Jinping. Biden in a latest speech
referred to Xi as a “dictator” and went on to add “that China (under Xi
Jinping’s leadership) is a ticking time bomb”. He rightly also stated “when bad folks
have problems, they do bad things”.
Given Xi’s childhood scars and absolute ruthless control
over the party, the army and the administration with scarcely any checks and
balances or alternate leadership to challenge his authority, Xi Jinping is a
danger to not just China and its neighbours but world at large. Xi Jinping’s obsession
with ideological purity, nationalism and unabashed hyper-militarism has reversed
Deng Xiaoping’s philosophy of embracing prosperity & the world, and instead
accelerated the Western de-coupling from China and deepened economic crisis
back home. Yet, Xi seems adamant caught in traps of his humiliating childhood
by trying to avenge his trauma by conquering Taiwan and if successful,
grabbing territories in extended neighbourhood by means of war.
If in the past, Mao’s fatal policies impacted only Chinese
people, this time – given China’s military reach, a lack of rational checks
& balances in Chinese government and an unhealed leaders vain ego, the entire
world would be impacted.
Afterword
With that context laid out, I anticipate two things in next 2-4
years. One, internal chaos in China as Chinese people react to deepening
economic crisis especially after tasting three decades of relative prosperity thus
forcing the underlying unresolved societal fault lines in Chinese society to surface.
Two, Xi ratcheting up hyper-nationalism in order to dissipate internal strife
leading to invasion of Taiwan. I also expect U.S. led coalition not to directly
engage China militarily instead use the “invasion of Taiwan” to further isolate
& cripple Chinese economy by blocking energy, food and financial pipelines.
In my observation, China will successfully swallow Taiwan
but the cost of it will become glaringly unsustainable soon and in-order to
break the logjam, China will tap into its alliance with Russia, Iran & North
Korea to forcefully break the U.S. led blockade especially for its energy and
material supplies from Middle East and Africa. By then China would have the five
ingredients necessary to ignite a large scale war - a blue water navy, the air
& military force, a ruthless dictator who cannot appear vulnerable, internal
socio-economic turmoil and resource scarcity.
I think, countries like Philippines, Vietnam, South Korea
and Japan are extremely vulnerable to second wave of Chinese-Russian attacks, followed
by nations in Europe especially the likes of Finland, Sweden, Poland &
Germany.
I do expect region of Iran & Af-Pak to converge with
China but for their own delusional death wish of “Greater Khorasan Prophecy” and
further inflame the war. In my opinion - Middle East, Europe, and Pacific Ocean
would be the main theatre of action initially, eventually forcing nations like
India and portion of Africa to intervene. India, however, would be the most consequential battle ground because India is the only Chinese adversary directly competing on land (with a border of approximately 3500 KM), seas, air and also having the human capital
The crux of my concern lies in whether the people of the subcontinent fully comprehend the extent of China's strategic initiatives and actions. While Pakistan appears preoccupied with averting financial crises and internal turmoil, the Indian government remains committed to fostering economic growth. However, it appears that tensions between India and Pakistan continue to dominate the attention of analysts, pundits, commentators, and "intellectuals" from both nations, at times magnifying the perceived threats emanating from each other. Moreover, the general populace tends to display heightened emotions, whether regarding religious affairs, political affiliations, or cricket matches. Unfortunately, this emotional focus leaves them largely unaware and ill-prepared for the impending and considerably more substantial threat posed by China. Furthermore, they often struggle to hold their governments accountable on China, with same vigour, as they do in Indo-Pak matters.
"He will win who, prepared himself" - Sun Tzu, The Art of War
References
Shift in China’s Defence Spending & Priorities
- By Jacqueline N. Deal, president and CEO of the Long Term Strategy Group, a Washington, D.C.-based defense consultancy, and Michael Mort, senior vice president at the Long Term Strategy Group.
- https://foreignpolicy.com/2023/09/07/china-economic-slowdown-pla-buildup-taiwan/
- China’s Expanding Submarine Fleet Makes Experts Worry About Taiwan’s Readiness
- https://www.voanews.com/a/china-s-expanding-submarine-fleet-makes-experts-worry-about-taiwan-s-readiness/6709507.html
- Expert’s warning to US Navy on China: Bigger fleet almost always wins
- https://edition.cnn.com/2023/01/16/asia/china-navy-fleet-size-history-victory-intl-hnk-ml/index.html
- Offshore bond issuance from China’s property sector evaporates
- https://www.financeasia.com/article/offshore-bond-issuance-from-china8217s-property-sector-evaporates/483191
- China's US Treasury holdings in June hit a 14-year low
- https://www.globaltimes.cn/page/202308/1296371.shtml
- China's March coal imports jump to 3-year high
- https://energy.economictimes.indiatimes.com/news/coal/chinas-march-coal-imports-jump-to-3-year-high/99453752
- China's oil imports surge in August as fuel exports, inventories rise
- https://www.reuters.com/business/energy/chinas-oil-imports-surge-august-fuel-exports-inventories-rise-2023-09-07/
- China-brokered Saudi-Iran deal driving ‘wave of reconciliation’, says Wang
- https://www.aljazeera.com/news/2023/8/21/china-brokered-saudi-iran-deal-driving-wave-of-reconciliation-says-wang
- U.S. disapproval of China's grain stockpiling full of irony
- https://www.reuters.com/markets/commodities/us-disapproval-chinas-grain-stockpiling-full-irony-braun-2022-07-25/
- China Conducts Major Military Exercises in Western Pacific
- https://www.nytimes.com/2023/09/14/world/asia/china-ships-taiwan-japan.html
- China's exports fall most in three years as global economy falters
- https://www.reuters.com/markets/asia/chinas-june-exports-fall-124-imports-drop-68-2023-07-13/
- Chinese real estate may be the world economy’s ‘most important single sector,’ says Fitch. But don’t expect Beijing to save it from crisis
- https://finance.yahoo.com/news/chinese-real-estate-may-world-121050018.html
- Xi Jinping’s last chance to revive the Chinese economy
- https://www.ft.com/content/92cbe94d-05a0-4ece-bca9-68cb82244b17
- China reaffirms President Xi Jinping’s dominance, removes Premier Li Keqiang
- https://www.pbs.org/newshour/world/china-reaffirms-president-xi-jinpings-dominance-removes-premier-li-keqiang
- Charting China's 'great purge' under Xi
- https://www.bbc.com/news/world-asia-china-41670162
- Biden calls China ‘ticking time bomb’, says ‘bad folks… do bad things’
- https://nypost.com/2023/08/10/biden-calls-china-ticking-time-bomb-says-bad-folks-do-bad-things/
The author is a part-time student of South Asian Peace and Security Studies, with deep commitment to bring about change in South Asia. The author has no political, government, NGO or media affiliations. And can be reached on X/Twitter @JungjooGernail
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