China’s Financial Web Does Not Spare Even It’s Own

• China concluded the 20^th Congress of the Chinese Communist Party (CCP) in Oct 2022. The outcome that was most high-profile and highlighted across the globe was the re-election of Xi Jinping as the Party General Secretary. With this he was ‘on track’ to be re-elected as PRC President for the 14^th National People’s Congress, which was concluded on 14 Mar 2023. However, what the headlines missed both in Oct 2022 and now in Mar 2023 was a wave of retirements of senior party leaders and military elites.

• These retirements, and the change-around of a large number of key personnel in the party and the military was a result of dissent due to the recent economic and real-estate crisis. The displeasure of these ‘elite’ personnel was not surprising as such was the angst amongst the common man. What was also not surprising was the      side-stepping of these senior leaders. It is common knowledge that anyone who is vocally critical of governmental policies even if such policies were ‘anti-development’, has always been side-stepped in the CCP govt.

• On 01 Oct 2022, to mark the 73^rd Anniversary of PRC, the flag-raising ceremony was held at Tian’anmen Square, Beijing in a grand manner. The superficial celebrations could however, not hide the displeasure of the common man. The scandals that drew national attention in China and protests by disgruntled customers just five months prior, which were violently quashed, were still fresh in the minds of people.

• In the 3^rd quarter of 2022, yet another banking scandal unfolded, as people were swindled out of their savings after being lured with false promises of high interest rates on deposits. The protests that ensued were compared by many to the Tian’anmen Square massacre (04 Jun 1989) which was a result of grievances that included inflation, corruption, limited preparedness of graduates for the new economy, and restrictions on political participation.

• What has changed in 33 years hence or for that matter in 73 years since People’s Republic of China was formed? A closer look only ascertains that it’s anything but in the interests of people themselves. As the world talks about the Chinese ‘debt-trap’ for countries like Pakistan and Sri Lanka, her own citizens, are facing a deadly ‘financial trap’. The real estate developers have stopped their projects and because of lack of credit, nearly 29 % of the industry has announced that it is near bankruptcy. The ‘Ghost’ cities all across China are known to many. The posh, glass windowed, state of art houses along the main roads, a common sight there, makes one wonder who stays in these houses. But behind these opulent housing societies are the houses of ‘Common Man’ of China.

• The average man in China today who is barely able to make ends meet, has zero say in the political or economic state of the country. The ‘rich getting richer and poor getting poorer’ is a common phrase in many countries. But in CCP led China, even the rich who are not directly part of the Communist party find themselves getting poorer by the day. The unreported and weakening state of internal unrest as well an economic turmoil are a cause of concern not only for China but all her neighbours.

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• Despite CCP’s stringent rules of ensuring citizens remain non-expressive and media remains controlled, the wavering public trust is now evident in all the Chinese Banks. Many an analyst had predicted that it is only a matter of time when the Chinese economy would start falling rapidly. The recent GDP growth of 3% against 8.4% of the previous year is testimony to this. The property sector is predictably at the centre of the storm, as the sector represents around 24 percent of China’s GDP, similar proportions of overall employment, and around 30–35 percent of total credit. Viral social media posts in mid-August 22 also showed local officials urging their subordinates to buy properties, even if they already owned multiple houses.

• Property sales revenues have declined by 31.4 percent so far in 2022, leaving developers unable to complete houses that were sold in 2020 and 2021. They are now awaiting financial assistance from Beijing to do so. The property sector was always going to be a drag on growth in 2022, dwarfing any pickup in infrastructure investment, but Covid-19-related restrictions have accelerated and deepened an inevitable economic adjustment.

Also Read, The Great Fall Of China

• The re-election of Xi and his assertiveness in terms of changing the polarity of the global order is a dream that CCP wishes to realise in the shortest timeframe. However, unless China’s economy and intentions are towards an inclusive and a fair global order, it is anyone’s guess how these ambitions will not only fall flat, but may also become disastrous not only for many nations that rely on China but also its own people. There is increasing evidence that many close friends of China are realising with much distress the ‘Debt Trap’ and moving away from China’s apparent friendly overtures. Similarly, it is just a matter of time when the people of China will also recognise the financial trap that they are in and voice their opinion lest they are left at the mercy of CCP blindly believing the ‘fancy’ dream that they are frequently shown by the Communist Govt.

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• The military assertiveness of China is also a means of diverting attention of its people from the internal economic and security situation. The subdued freedom of speech imposed on Chinese common man by the CCP will not help Xi and his team hide the truth for long in today’s age of transparency. Eventually, CCP Govt’s bluff will be called internally as well, just as the world has now realised the ‘debt trap’ policy with international friends.