A Second Century of Humiliation
An Unstable History
China’s relationship with history is awkward. On one hand, China represents a civilized bulwark of a state that has existed long before European states could even grasp at governments. In many ways, China founded the idea of the state, and the state apparatus has existed in China since the Warring Kingdoms. Nevertheless, China’s history after unification was not a peaceful one. Whether discussing court politics, local ethnic rebellions, massive floods, and astronomical famines, China has a habit of a continual process of death and rebirth every few decades. This timeline has had two main moments of interruption where there was relative peace in China: the first during the Mongol occupation, and the second is now. Their time of grandeur now comes after China’s “Century of Humiliation”, beginning in the 19th century and ending after WWII. It represents a time during which China had no security of its own borders, constant foreign interference, and disasters that wreaked havoc on the populace. China, as a state, is able to remain cohesive when it exists in opposition or subjugation to another entity. Since the latter is historically abhorrent, the former has given rise to some of the most vehement western hate and chest-thumping the world has ever seen coming from China. Nevertheless, China today is a paper dragon staring down the second century of humiliation. The Chinese Communist Party (CCP) got to this point by dismantling China’s demographic base, resource insecurity, and cultivating incompetent leadership practices. At this point, it must be clarified that this argument has nothing to do with the Chinese people and everything to do with the CCP.
China is not a unified entity. The CCP has painted an image to the outside world that its population of almost 1.2 billion people is made up of almost 92% Han Chinese. At face value this is accurate, but it happened due to a long process of sinicization. In brief, sinicization has been the process by which the Han majority have been assimilating other cultures into the main Han identity as a means of unifying the populace. A key example of this comes from the sinicization of Northern Wei (Northern China) with the Jin Majority in the South. The problem with looking at China in unified strata is that it ignores the concerns and positions of each individual location. China, while internally stable, has wildly different priorities depending on location. Historically, the integration of distant groups has been economic and cultural, enabling a shared transition so that both the Han and the absorbed ethnic group can see remnants of each other's culture as they morph together. The Han, while undoubtedly the dominant population, is more accurately broken up into thousands of smaller populations that are all Han variants; unified on paper but not in practice. Beyond the 56 ethnicities that the CCP recognizes there are also countless subdivisions that the Chinese government chooses to ignore to provide the image of unity beyond its practical application.
In addition to the ethnic divides internal to China, there are also situations of regional conflict that the CCP tries to cover up. One of the few things both the Biden and Trump administrations could agree on is that the CCP engaged in an active genocide against the Uygur populations in northwest China. In the United States, the open and free nature of the press allows for every school board squabble and Capitol Hill spat to be known by every citizen of the country, but in China, any dissent is seen as a matter of national security. Every indication from China implies unity, yet China simultaneously takes egregious offense when foreigners call Taiwan a country. These actions are not what one would expect from a healthy and stable government, and heavily implies that the CCP is terrified of its own instability so much so that even rumors of discontentment are purged with impunity.
The Paper Dragon
China’s stability is dubious at best, and its largest challenge comes in the form of a nightmarish demographic “pyramid”. As with many totalitarian regimes, the CCP has a bad habit of doctoring their demographics to appear to be in situations of economic growth, but after the complete halt of China’s growth during the Coronavirus crisis, the CCP released terrifying documents. Looking at China’s growth trajectory from the CCP indicates that there will be half as many ethnic Chinese in the year 2070 as today. Accounting for the likelihood of how the CCP warps their demographic data, American Chinese scholars have placed independent estimates that there will be half as many ethnic Chinese on the mainland in the year 2050 as today. China has the fastest aging population in the world and in human history, and it all started with the one-child policy. After 40 years of the one-child policy, China is starting to run out of 40-year-olds (funny how that works), and while the government has recently been walking back those limiting practices, they are too little too late. The Chinese baby boomers, the single largest population glut in human history, were not allowed to have children, and China’s generation X is aging into retirement age without families.
Demographics may not seem important, but they represent China's biggest source of value: its people. After China opened itself back up to the world in 1978 it saw unprecedented growth in GDP. Chinese labor could be brought on for a fraction of western competitors, and Chinese workers were tireless and dedicated to escaping the poverty and famine their parents had endured under Mao. Foreign companies were eager to invest in manufacturing plants in China, and state officials quickly capitalized on the influx of foreign funding by becoming some of the richest people in the world. When a society ignores the difficult task of procreation, they are initially met with massive growth. In the countryside, children are assets as they supplement the workforce and provide security for their parents, but in the city, children are more akin to expensive furniture. Children temporarily represent a resource sink, and when people did not have to support families they could simultaneously work for less and spend more of their money on bikes, barbeques, and beer, and the economy subsequently exploded. That growth was driven by debt, but the CCP assumed that its growth trajectory would stabilize as its economy escaped the middle-income trap; unfortunately, that never happened.
The Oncoming Nightmares
According to the CCP, their current debt to GDP ratio is roughly 300% of its GDP, but this fails to account for credit shortages and associated generation. Most of the debt China owes is internal to the government and is lost on paper. This is exemplified in China’s capital flight, because whenever the Chinese government opens up the Yuan to international trading a few trillion dollars of value disappears in a matter of weeks before the CCP can close the barn door. Nobody wants Yuan, and since the year 2000 there has been an excess of 3300% increase in credit shortages (for reference America has barely crested 100% after 22 years of refusing to restrain the budget). When the 2000s came around China started running out of people to fill the tax paying bracket while massive slices of their labor sector began the transition towards retirement. Japan, when faced with a similar demographic collapse, tightened its belt and accepted the 1990s as a lost decade, but the CCP is so terrified of losing power that they have kept doubling down time after time. The off-ramp for a lost decade was over 20 years ago, and simply from debt and demographic collapse, China is now looking at a minimum of half a century of obsolescence and economic collapse.
The aforementioned argument assumes that China stays on the current trajectory and that no global events disrupt the already precarious situation the Chinese have blundered. At this point, the Russia-Ukraine war enters stage left. By all accounts, when Putin and Xi met during the winter Olympics, Putin told Xi that the conflict in Ukraine would not negatively affect China’s intranational or international priorities; he lied. Russia is the world’s second-largest producer of potash, and Belarus is third. Russia is the world's largest producer of natural gas and the second-largest producer of crude. These resources may seem innocuous but they are the necessary components of fertilizer that cannot be easily produced elsewhere. Agriculture land in China is sub-par, and Chinese farmers have to use more than 4 times the fertilizer inputs while still producing less yield per acre than American farmland. As such, China depends on the free flow of foreign food shipments and fertilizer inputs to feed its population. For reference, In 2017 China’s food imports were worth $105 billion while their exports only accounted for $60 billion (and this was while they still had access to unlimited fertilizer inputs). +It is important to note that China does produce a lot of potash, but it already imports more to compensate for its massive consumption. Potash only represents the potassium needs of Chinese agriculture, and they also need to dump copious quantities of phosphorus and nitrogen fertilizers. Those nitrogen inputs that they require come from natural gas fertilizer plants and redirecting the flow of natural gas from European states who sanction Russian energy to China’s markets is nigh impossible. Russia’s natural gas pipelines cannot teleport product to Chinese fertilizer plants, and now that food exports out of Russia and Ukraine are disappearing, China is looking at an unprecedented famine beginning in the 3rd quarter of this year. If the CCP already cultivated an unstable, genocidal, economically declining nation before the famine, it is hard to imagine that food shortages will improve the environment. Besides crop yield failure, China was struck with an outbreak of African Swine Fever in 2019, but because the CCP has failed to perform proper culling practices the disease still runs rampant in herds. China consumes and produces more pork domestically than the rest of the world combined, so to lose such a massive source of food for the foreseeable future will only aggravate the food shortages.
In addition to food resource insecurity, China lacks the ability to express international power from a technological perspective. For example, while America only produces 11% of the world's microchips, America accounts for 60% of the value in the microchip industry. This is because not all technological inputs are created equal. The microprocessors used by Google and Tesla that are required for mass data analysis are produced in America, South Korea, Japan, and Taiwan; these are the highest level chips. The mid-level chips used in manufacturing largely come out of Thailand, Malaysia, and Japan. The low-end chips that make a blender sing after the timer runs out are made in China and Vietnam. As the Chinese labor market dries up, more of that market is moving to Vietnam, but it still represents a tiny fraction of the value in the market. China began an initiative called Made in 2025 to signify that by 2025 they hoped to achieve technological parity with the Western World. By current estimates based on the progress, China has made so far the actual date is proposed to be closer to 2080. The Chinese technological revolution has been like smoke in mirrors, but it has been leveraged to enable nationalism and keep some tech companies on the mainland. In addition, China is forced to import most of its raw materials from international sources before assembling them on the mainland and exporting a finished product. As such any large disruption in mineral shortages caused by the war in Ukraine will result in massive increases in production costs. The Chinese government usually takes the approach of a “pawnshop economy” in such times, according to Jack Ma, and will have to buy and store excess production to keep their industrial sector producing.
If all these factors were not bad enough, the CCP’s leadership has left much to be desired. Because the Chinese government bases its security on its ability to provide goods and services to its people, the role of the internal messenger has often been associated with a shortened life expectancy. Delivering bad news up the chain of command is a predictable way to get disappeared, and many municipalities will gladly take on more debt from the government to pay back inflexible loans so that they do not have to inform Beijing of civil unrest resulting from incompetent management. For example, international observers have been quick to point out that Russia is falling into debt due to the economic sanctions and inability to stabilize their currency, but Evergrandes net liabilities are greater than the entire Russian debt. That means that this one Chinese company has outstanding liabilities totaling over $300 million. Information is not dispersed within the government, and there are internal reports that imply the rolling blackouts across China that began last May were unknown to Xi until September. Even after Xi was alerted to the rolling blackouts, no solution was even proposed until November. This is an administration that believes if they do not see a problem then the problem will resolve itself; when the famine hits, the CCP will do nothing to acknowledge the administration’s failures until the death toll hits a critical mass.
Over the last few decades, China has seemed a worthy competitor to the United States, but this has all been a mirage. China does not have the population security, food security, resource security, technological parity, or governmental competence to avoid an unmitigated disaster. These components are multiplicative, and each will aggravate the other until China makes a drastic change, or becomes a husk of its former glory. While the CCP has enabled the construction of beautiful cities in deserted regions, bridges over flood plains that need yearly repair, vaccines that are ineffective at stopping the transmission of Coronavirus, and high-speed rail networks that are rarely profitable, the CCP has also hastened the second Century of Humiliation that will see the irreversible downfall of China.
~ fin ~
Sources:
https://www.nytimes.com/2022/01/17/world/asia/china-births-demographic-crisis.html
https://www.cnbc.com/2021/11/25/china-tech-5-big-issues-from-regulation-and-evs-to-semiconductors.html
