A PEEK INTO EVERYDAY CHINA : PART 3 BY LT GEN P R SHANKAR (R)

PART 1

@ https://www.gunnersshot.com/2021/11/a-peek-inside-everyday-china-by-lt-gen.html

PART 2

@ https://www.gunnersshot.com/2021/11/a-peek-into-everyday-china-part-2-by-lt.html

This is the first article I am writing since the late CDS, General Bipin Rawat joined the ashes of his fathers and temples of his gods. It was great to see people of Nilgiris giving their final 'Vannakam' to their 'Veera'. It is in this context,  I thought that I should write on China in which we had a common interest amongst other things. 

  

Yesterday I was part of a web event organised by a think tank. It focussed for two days on the latest international military and security fad – Gray Zone Warfare. It seemed as if China is invading the world through Gray Zone Warfare and influence operations by shaping public opinion through propaganda. It also emerged that China is infiltrating all democracies and undermining them! Of course the rant of the day was how it is digging deep holes into the Indian polity. It reflected a few things to me. Firstly our think tanks do not think. They cut and paste certified Chinese propaganda from Global Times or China Daily. Secondly. Most of us have a very poor view of Indian strengths and our weaknesses are gigantic. We need to revise our own image. If India is the fastest growing economy despite all the Gray Zone warfare being rained on us by China and despite all this if the Chinese economy is perceptibly slowing down, there must be something right we are doing. Is it not so? Thirdly, Gray Zone warfare is age old Kutneethi of the Chanakya mould. We should be adept at playing it out with our venal politicians and lethal media. All it needs is a bit of knowledge and focus. Fourthly, we operate from a fundamental lack of knowledge of China. In China two things matter most – People and Politics. Track the two and everything falls into place. Our own form of Gray Zone warfare can then commence. 

 

It is in this context that I started this series of a ‘Peek Into Everyday China’. In this you will find extracts of articles from South China Morning Post along with my comments. You will see that China is going through a change based on revisionism at one end and ambition at another end. It is a typical communist mentality - always greedy and seeking for more. You will also see that China has sub surface problems which come out one in a while…if someone understands these and handles them intelligently …we are in the Gray Zone! All I am doing in this is providing grist for the mill…            

 

Headline: China equipped to stop Omicron if it arrives, Beijing official says @ https://www.scmp.com/news/china/science/article/3158676/china-equipped-stop-omicron-if-it-arrives-beijing-official-says?module=lead_hero_story&pgtype=homepage

Extract : The Chinese authorities are ready to rapidly identify the new coronavirus variantOmicron if it reaches Beijing, a health official said on Monday….“We have established the testing capacity for mutant strains to prevent and control Omicron,” said Yang Peng, an official at the Beijing Centre for Disease Control and Prevention….The Omicron variant has yet to be detected in mainland China, but its emergence in several countries and territories could pose a new threat to the government’s much-debated zero-Covid policy, involving mass testing, frequent contact tracing, lengthy quarantines and strict border controls…Chinese officials have admitted previously  that there was a high chance of the variant being introduced to China, but they insisted that the country’s testing regime would succeed in detecting any cases and its zero-tolerance strategy would halt community transmission….Local governments are running tests and tracing  on a daily basis.

My Comment : Omicron will enter China. The Chinese authorities need not worry or feel disappointed. It will team up with Delta to give a double whammy to China. One thing is for sure. China is in for a long time of mass testing, tracing and extensive isolation. Do not be surprised if reports come out of long queues of Chinese waiting to put their pants down for anal swabs. As long as the Virus lasts in China in some form, it is going to trouble its mother… 

  

Headline:  All eyes on China Evergrande, Kaisa as indebted mainland developers face bond repayment deadlines @ https://www.scmp.com/business/china-business/article/3158669/all-eyes-china-evergrande-kaisa-indebted-mainland

 

Extract : Evergrande has expressed its inability to repay interest on two offshore bonds…Evergrande has until midnight on Monday to repay US$82.5 million in overdue interest on two offshore notes, while Kaisa’s US$400 million bond matures on Tuesday..Investors will be closely watching if China Evergrande Group, the mainland’s most indebted developer, will officially default on its public debt for the first time and whether it will be joined by another highly leveraged peer, Kaisa Group Holdings….Evergrande, which has entered debt restructuring under the watch of the Guangdong provincial government, said last Friday that it may not be able to fulfill its pledge to guarantee payment on a US$260 million bond. It has until midnight on Monday to repay US$82.5 million in overdue interest payments on two offshore notes. Evergrande missed the payments on November 6 and had a 30-day grace period to come good on its dues…Meanwhile, Kaisa has a 6.5 per cent, US$400 million bond maturing on Tuesday. Kaisa will have officially defaulted if its fails to wire the money to its bondholders on time as there is no grace period.

 

My Comment : Evergrande plus Kaisa. Hmm. I am waiting for the next property firm to join the circus line. A government overseen restructuring and controlled meltdown has started. China is an economy where 25-30% of GDP is real estate dependant. Such dependency is double that of any other country in the  history of the world…If this sector is melting down…what is the future? Aage aage dekho hota hai kya… The debt fuelled infrastructure based economic rise of China story is over as per my estimate… 

Headline: China’s rising living costs, economic uncertainties leave lower-income groups unwilling or unable to spend@ https://www.scmp.com/economy/china-economy/article/3158350/chinas-rising-living-costs-economic-uncertainties-leave-lower?utm_source=cm&utm_medium=txn&utm_campaign=enlz-NOT-Follow&utm_content=20211204&d=35966e13-e587-4f43-bdf9-1b3fb4901ad3

Extract : While overall income growth among many Chinese has yet to recover from the impact of the pandemic, demand among China’s lower-income groups is likely to remain subdued as pressure grows on the economy. Payroll growth had already started to decelerate in recent years, and it was only worsened by the pandemic. Those low- and middle-income Chinese are feeling the pressure of stagnation on their lives, giving impetus to the common-prosperity drive. Their incomes have stagnated over the past two years, and the rising cost of living is curtailing both their spending power and willingness to consume. Huang Weijie, the 45-year-old owner of a small garment factory in China’s manufacturing and export hub of Guangdong province, said sales have plunged due to weak demand. To make ends meet, he has turned to clusters of nearby street stalls. Many of China’s small and micro businesses, which often pay at or just above the minimum wage, are also facing payment delays and high operational costs, leading to redundancies and pay cuts.

 

My Comment: There is pain at the bottom. Just think. When you feel pain in your foot…what do you do ? hobble…The Common man is going to make China hobble. If their situation continues, the CCP will resort to greater common property measures…these will hobble the Chinese system even more…this is a vicious cycle as we all know it. 

   

Headline : China’s population to peak in 2021 as demographic turning point has already arrived, threatening to disrupt Beijing’s economic ambitions @ https://www.scmp.com/tech/policy/article/3158373/chinas-population-peak-2021-demographic-turning-Vpoint-has-already

Extract : The size of China’s population already peaked this year, which is much earlier than expected, according to Trip.com Group executive chairman James Liang..Falling birth rates, an ageing population and shrinking labour force represent headwinds that could disrupt China’s economic development…China’s population is expected to peak in 2021 and fall steadily in the foreseeable future in a turning point for the country’s population trajectory, according to James Liang, executive chairman of online travel platform Trip.com Group and renowned demographics expert…Liang told the South China Morning Poston Thursday that the number of births across the country fell 20 per cent to about 10 million in 2021, citing published data from local Chinese authorities, while the number of deaths could be more than 10 million this year.

My Comment: The cat is slowly coming out of the bag… My research indicated that the Chinese population has peaked a couple of years back and is now already on the decline. I have outlined it in detail @ https://www.gunnersshot.com/2021/10/china-fire-breathing-dragon-or-sick.html and  https://www.gunnersshot.com/2021/10/blog-post_27.html . Chinese ageing rates and falling birth rates are faster than any other country in the history of this universe.  Wait and watch…in five years we are going to see a different China…the indications are already there… 

Headline @ China’s economic policymakers doubling down on ‘stability’ for 2022 in the face of ‘threefold pressure’ @ https://www.scmp.com/economy/china-economy/article/3159275/chinas-economic-policymakers-doubling-down-stability-2022

Extract: “We are facing threefold pressure, including contraction of demand, supply shocks and weaker expectations,” the official Xinhua News Agency reported, citing an official statement from the conference. “Our policy support should be front-loaded appropriately.”…The emphasis on “stability” – the word appeared 25 times in the 4,700-word statement – comes as leaders are trying to project a positive image to the world ahead of February’s Beijing Winter Olympics, and with their sights set on the 20th National Party Congress – a key political gala that will usher in twice-a-decade leadership reshuffle for the Communist Party in the second half of next year.

My Comment : Ah ha!  This statement has emanated after Xi Jinping ji presided over an economics conference of the CCP! Whether the communists ‘front load’ their policy or ‘backload’ it does not matter. They apprehend instability. Contraction  of demand, supply shocks and weaker expectations are what economists call a…recession…or is it stagflation ?  Whatever it is , China is not the runaway train it used to be.      

Headline : China population: article demanding Communist Party members have three children goes viral @ https://www.scmp.com/economy/china-economy/article/3159079/china-population-article-demanding-communist-party-members

Extract : Members of China’s Communist Party (CCP) have a personal obligation to help tackle the country’s plunging fertility rate by having three children, according to a commentary that has since been scrubbed from the internet….“No party member should use any excuse, objective or personal, to not marry or have children, nor can they use any excuse to have only one or two children,” said the article published by China Reports Network, which was published last month but started gaining traction on Wednesday…“Every CCP member should shoulder the responsibility and obligation of the country’s population growth and act on the three-child policy.”…Opinion piece says members must ‘act on the three-child policy’ to boost China’s low fertility rates…Original article has been removed, but screenshots have been widely circulated on social media

My Comment : This is a gem…many things come out from this report..firstly..the three child policy is not working…secondly…the common man is asking CCP to practise before preaching…hence do we expect to see the CCP members on the job to boost population? Funny…thirdly…do not miss out on the scrubbing from the internet part…fourthly…connect it with earlier reports on population decline… what is the picture one sees? 

 

Overall Comment: The larger picture of China which is emerging is not one of a superpower in waiting. The international commentary and analysis indicates that China has peaked. The problem is that as China declines it will become more problematic to the world militarily. Economically, Ruchir Sharma feels that the impact might not be that much (see the embedded article). I will welcome views… in the meanwhile, Gray Zone artists can continue with their bleak outlooks.