China's economy has deflated. What does it mean in terms of China's expansionism initiatives?

CPT Gurinder (Gene) Rana — Mon, 21 Aug 2023 03:51:21 -0400

China began expanding its reach through its OBOR and MSR initiatives. It wanted to drive China across Asia, Europe, Africa and into the Americas. It wanted to control global economies through its preferred loans from its BRICS program. However, the Chinese economy has gone into deflation and consumer confidence at home has taken a dive. European countries are increasingly lowing their reliance on China. How will these changes affect the Chinese initiatives OBOR and MSR?

Response by 1SG(P) Dean Mcbride (MPER) (SPHR) made Aug 21 at 2023 9:09 AM

1SG(P) Dean Mcbride (MPER) (SPHR) — Mon, 21 Aug 2023 09:09:01 -0400

It could be that China's economy is heading for a total collapse. You are probably thinking: no way! It boasts a massive military, has an iron grip on its people, and owns a whopping $870 billion in U.S. debt. However, a few metrics offer evidence of an economic contraction. For example, the country’s exports dropped 9.9% from the previous year. This is not good - when you look at China's economy, you will see that it relies heavily on international trade; for example, in 2021 its exports accounted for around 20% of its gross domestic product. Because of that, China is actively seeking to shift towards domestic consumption to drive growth. However, a larger domestic shift will take time and require significant changes in China's economic structure and policies. In the meantime, China's economic decline will continue - perhaps not total but enough that other countries will notice.

Response by SGM Private RallyPoint Member made Aug 21 at 2023 10:44 AM

SGM Private RallyPoint Member — Mon, 21 Aug 2023 10:44:57 -0400

It could create a sense of urgency to invade Taiwan. Xi is already worrying about his popularity and Taiwan could provide a short term economic boost while also distracting the general populace.

Response by SFC James Smith made Aug 21 at 2023 10:55 AM

SFC James Smith — Mon, 21 Aug 2023 10:55:57 -0400

I heard an interesting comment about China's failing economy from Ben Shapiro. Primarily due to China's One Child policy that began in the early 1980's and just ended in the mid 2010's, the average age of the Chinese citizen is much higher than other developed countries. Their population is shrinking with increasingly older citizens and fewer younger ones to support them. Generally, civilizations population by age needs to be shaped like a pyramid with the smallest population being the elderly and the largest population being the young. A self replacement rate for society needs to be 2.1 or greater... China's is 1.15 (an average Chinese couple is averaging only 1.15 children for every 2 adults) . The younger working class pay into the system that supports the smaller older population. China's age demographic is inverting, largely because of their One Child policy. They are now presented with the difficult challenge of supporting the ever increasing older population with much fewer income earning younger people.
The USA is experiencing a similar crisis, but it is primarily because the younger generations do not wish to be married or have children or identify as LBGT and therefore do not reproduce. The USA replacement rate is around 1.7. This is already affecting Social Security. My most recent statement said that I could only plan on receiving about 80% of my calculated benefit after 2034. There are less income earners now to support the Baby Boomer generation that is retiring now.

Response by COL Dan Ruder made Aug 21 at 2023 1:19 PM

COL Dan Ruder — Mon, 21 Aug 2023 13:19:43 -0400

OBOR and MSR are STRATEGIC economic projects for China and are sources of their economic power with huge geopolitical implications for their international standing. China make take a temporary conservative approach to borrowing and lending, and delay some of its domestic infrastructure projects. But China's diplomatic relationships and political leverage will likely sustain international support for OBOR and MSR. Counter to the theories of economic deflationary impact, partner countries are not concerned about China's ability to fulfill its commitments over the LONG-TERM, nor are they likely to worry about the financial viability of joint projects over the long-term.
In the short-term, the impact of Chinese deflation on OBOR and MSR will depend on the severity and duration of the deflationary period, as well as how the Chinese government responds to these economic challenges. If we see China investing more into its domestic economic stabilization, social welfare, and job creation, we should not expect that it would take precedence over overseas expansionist projects. The strategic art is how lop-sided will the Chinese government keep the balance between domestic and international priorities.

Response by SGT Stephen Rowland made Aug 21 at 2023 3:23 PM

SGT Stephen Rowland — Mon, 21 Aug 2023 15:23:02 -0400

China’s economic woes will become worldwide. We may not depend on them manufacturing so many products but our own factory orders are declining. I would think that inflation has put the brakes on manufacturing. The destruction of the Nord Stream pipeline has crippled German industry and they are in recession. The downward cycle in my humble opinion is just starting. New vehicle inventories according to Cox Automotive reached its highest level in two years. Layoffs will be the result of slowing
Manufacturing. China is the industrial motor for the world, and any slowdown in trade speaks volumes about here, Europe and the rest of the world. When was the last that time the IMF, International Monetary Fund forgave any loans ? Yes, China May slow on its Belt and Road initiative but the sad part is most of the world is slowing down economically.