Late last week, came two important economic projections for the coming year for Xi. The first was that their economy would expand by 5% and the second, that they would increase defense expenditures to 7.2%. Here’s the bottom line when it comes to believing official Chinese announcements about anything… don’t! People, nations and organizations are what they do, not what they say.

Xi, like Chinese leaders since 1949, consistently lie, and don’t even do it well. While that Fitch and the S&P analysts are far more accurate than Chinese projections, data from and about China requires detective work, and lots of it. One of the primary issues regarding the health of the Chinese economy still revolves around COVID.

Xi’s willful mismanagement of his COVID response, tanked the global economy in 2020 and despite overly optimistic data in 2021, their economy still lags. This is largely due now to the recent COVID outbreak in China, followed by a general uprising against Xi’s “Zero COVID” policies, which greatly undermined Chinese manufacturing. This, then adversely impacts our economy and the world’s. Besides profiteering by US corporations, China, for a variety of reasons is the reason for inflation. This is a far longer discussion for another article.

China’s aggression, as discussed in previous TAT, Chinese threat analysis, revolves around three defining characteristics:

1. Military intimidation

2. Human rights abuse on a massive scale

3. Coercive economic policy

The economic growth projections are partially related to their coercive economic policies. Next, we’ll look at the second projection regarding Xi stating that he’s upping his military investment to 7.2%.

Like his economic projections, Xi is lying about his military investment, as expected. It’s long been a feature of China’s military investment that they understate just how much they spend on defense. China under Xi has spent wildly on building what they believe to be a top tier military. They are not only mistaken but dangerously so.

Both China and India have primarily built their military on Russian systems and weapons. Both share between 60 and 70% overlap with Russian systems, regardless of, if manufactured in Russia or domestically. Putin’s inglorious failures in Ukraine are in many respects, due to both their mistaken beliefs that what Russia was selling them was top tier. Ukraine, using top tier western systems and technology has thoroughly dominated Russia. It’s not just the technology though, as that Russian, Chinese and even Indian domestic manufacturing of Russian systems is infected with corruption and poor, quality control.

Let’s bring this article home by adding a summary of what these two projections about Xi’s economy and military, mean to US and global security.

First and foremost, Xi rarely misses a chance to make terrible strategic decisions. The best thing we can ascribe to Xi regarding the Chinese economy, is that it’s Xi himself that‘s the problem. Over-investment in his strategy to acquire regional hegemony by 2035 and global hegemony with a Chinese, “tributary system” by 2049 has largely been along his highly touted BRI/ Belt and Road Initiative. All along the BRI’s most important transit corridors, Xi has a very serious losing streak going on.

The three defining characteristics previously discussed can be found in nearly every nook and cranny. His coercive and predatory “loans” are now being re-negotiated in many corners of the world. As that Beijing has already loaned this money and now cannot collect, impacts his poor domestic economic errors, while concurrently undermining trust in China’s partnership. In short, China‘s economy doesn’t reflect the growth nor stability most believed it had. US and other global corporations, now whining that Xi steals their IP/ intellectual property and doesn’t play fair, failed to do their due diligence. Now they pursue the US government and other global entities to pressure China into “playing fair.” In truth, should major corporations band together and apply their own pressure they would be contributing to global security and their own bottom line. Look at those who rushed into Russia for profits and ended up losing… big.

As that Xi’s likely overly optimistic economic growth predictions will struggle going forward, this will also likely impact his military investment. Also, where exactly does Xi think he’ll find a replacement for the miserably poor performing Russian systems. China and India both, so heavily dependent on key Russian systems and weapons will require both innovation and a course correction to bring them both up to speed. In this case, both Xi and Modi have, “hitched their wagons to the wrong horse.” Course corrections of this depth, often take years, not months.

While there is a lot of media focus on Xi invading Taiwan, global unity against Russia in Ukraine, is a serious message to Xi to also tread carefully against a world aligned against military aggression. Putin’s remarkably poor military showing and lack of allies in Ukraine should also be a clear, concise lesson about going to war against experienced, top tier militaries and technology, motivated by morality and self-defense.

After all of this discussion, the only thing to really fear from Xi’s blustering about Taiwan, is that he will continue his streak of idiotic strategic miscalculations. China in my opinion, cannot at this time win a war of any serious nature, nor can he exercise the coercive economic aggression as he did 3 or more years ago.

Prudence in threat analysis is always required and Xi is still a threat. Is he an imminent threat… not likely. Should he choose as poorly as he is accustomed to, like his fading bromance with Putin, we may just take care of our two biggest aggressors in a matter of just a handful of years. This of course depends on sustaining our support for Ukraine rather than allowing the Speaker of the House, Kevin McCarthy to pursue his declared agenda of reducing or stopping our Ukraine support. If he does so, he weakens the global alliance against aggression and empowers both Putin and Xi.

We are currently on a productive course towards a more stable/ safer world. Our NSS, National Security Strategy clearly indicates this course is our intended one. While we must still make far more progress, we should never go back towards the isolationism and corrupt foreign policy of the Trump administration. In fact, it would make us and the world, far more vulnerable.

The bottom line here, is not allowing fear-mongers, political, defense contractors etc. to drive your understanding and decision-making, regarding the true nature of our threats. Facts matter.

My very best for everyone’s week,

Paul

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