China's Growing Unrest and Aggression on the Global Stage

The Declining Economic Situation in China

The deteriorating economic situation in China is no longer a secret. The Chinese Communist Party's (CCP) 75th anniversary was marked by austerity, reflecting the country's economic downturn. The decline was initially triggered by the Trump administration's steep tariffs on Chinese goods in 2018 and 2019. However, the COVID-19 pandemic and the CCP's stringent three-year "zero-COVID" lockdown period have exacerbated the situation.

Challenges Faced by the CCP

As the final quarter of 2024 approaches, the CCP is grappling with unprecedented domestic economic conditions. Civil unrest has surged by 18 percent compared to the previous year. The economic slowdown is multifaceted, with the real estate sector, which contributes about 30 percent of the GDP, continuing to plummet. Moreover, consumer spending, which accounts for only 38 percent of GDP, is on the decline.

Unemployment and Disillusionment

Unemployment among China's youth (ages 16–24) has been a significant concern. The CCP ceased publishing unemployment figures in June 2023 when the rate was at least 21 percent. A new method of measuring youth unemployment, excluding students, was introduced in December 2023, which reduced the figure to 14.9 percent. However, this rate is still almost three times higher than China's national rate of 5.1 percent. This high unemployment rate among the youth is contributing to the "lie flat" trend, where young people have little hope or ambition to achieve the lifestyle their parents enjoyed.

Political and Industrial Policies

China's economic realities are deeply rooted and cannot be easily altered. The party doctrine asserts that China's primary economic advantage lies in its low domestic consumption and high savings rate. These factors allow domestic capital to flow directly into the state-controlled banking system, giving the Party significant control over industrial policy and private capital. However, these policies have led to overproduction and unprofitable factories, causing trade frictions and worsening conditions in China.

The Downward Spiral Continues

Over the past few years, China has been caught in a downward spiral of deflation, falling domestic consumption, and declining confidence in the CCP. The CCP is expected to continue supporting critical sectors like artificial intelligence, robotics, and military enhancements, while other sectors may not receive any bailouts. This situation is evident to many, both within and outside China, as billions of dollars in investment and capital continue to leave the country.

The Rise of Wolf Warrior Diplomacy

China's rising aggression on the global stage, termed "wolf warrior diplomacy," began in 2019, coinciding with the COVID-19 outbreak and global criticism of Beijing's handling of the pandemic. This approach is not aimed at improving the investment environment in China but rather controlling the narrative at home and intimidating the rest of the world. As economic conditions continue to deteriorate, the CCP is likely to blame the West and other foreigners for its economic failures to stir up nationalism and justify further aggressions.

Current Global Incidents

Despite some observers believing that Beijing's days of wolf warrior diplomacy are over, current events suggest otherwise. These include the Chinese regime's provocative incursions into or near the territorial waters or airspace of the United States, Taiwan, and the Philippines, border battles with India, and a desire to expand control of the South China Sea. As the preference for aggression over diplomacy increases on the global stage, Beijing sees an opportunity to influence and/or intimidate other nations.

Bottom Line

The economic downturn in China and the subsequent rise in aggression on the global stage are interconnected. As the CCP struggles to manage the economic crisis, it is likely to continue its wolf warrior diplomacy to control the narrative at home and intimidate other nations. This situation presents a complex challenge for the global community. What are your thoughts on this issue? Share this article with your friends and discuss. Don't forget to sign up for the Daily Briefing, delivered every day at 6pm.