Gordon Chang on China's Economic Warfare and Xi Jinping's Weakening Grip

Xi Jinping's Declining Influence

• 🧠 Xi Jinping is reportedly weaker than perceived, with a mini-stroke potentially leading to the Communist Party's Politburo taking military oversight away from him.
• ⚠️ The disappearance of General Hue Dong, Xi's top military supporter, and other military personnel suggests significant infighting within the Chinese military.
• 🎯 General John Yao Shao, the number two in the Central Military Commission, is identified as a key figure to watch amidst this turmoil.

China's Economic and Geopolitical Strategies

• 🚢 China is reportedly threatening to block the sale of Panama Canal ports to BlackRock and MSC unless Chinese shipping company Costco is involved, indicating a move to exert control.
• 📉 China's reported GDP growth of 5.2% is questioned due to deflationary pressures, with producer prices in negative territory for 33 consecutive months and CPI down in four of the last five months.
• 🏠 The country faces challenges with 63 million vacant properties, which, combined with deflation, kills consumer demand as prices are expected to fall further.

Impact on American Industry and National Security

• 🏭 China's predatory trade policies aim to decimate American factories by initially lowering prices to dominate industries, then raising them once control is established, as seen with rare earths.
• 🛡️ This strategy poses a national security risk, as temporary lower prices mask a long-term threat to American industrial capacity.
• 📈 To counter this, the US needs to industrialize, implement high tariffs, and offer investment tax credits to encourage domestic business growth and reshoring of supply chains.

Regional Instability and Taiwan

• 💥 The turmoil in Beijing and disarray in the Chinese military may prevent an immediate invasion of Taiwan, but provocative activities across the region increase the risk of a wider conflict.
• 🚨 An incident going wrong due to regional tensions could lead to a conflict that China, in its current state of internal turmoil, cannot deescalate.