How families are changing in China – Update

For thousands of years in China, the elderly were held in great esteem for their knowledge, and expected to guide future generations by passing along their hard earned wisdom.  This is based in part on the Confucian principle of filial piety which requires not just respect and care for the older generation, but also an almost unthinking obedience to their authority.

This post updates my 2021 piece How families are changing which described how long-standing customs were being challenged by industrialization and urbanization.  A social structure built for a rural society with stable extended families living together was overturned when hundreds of millions of young people moved to newly built cities, to take advantage of the opportunities of China’s rapidly growing economy. 

As an article in the Journal of Comparative Family Studies noted, the changes in China family structure reflect worldwide trends related to industrialization. “Modernization impacts family structure, relationship, values and beliefs. Families become nuclear while people become mobile and the society becomes urban. Economic development provides employment opportunities outside the birthplace.”

The effects on families were magnified in China by its ill-advised “One Child Policy.” Beginning in 1979, the government attempted to reduce population growth by limiting each family to a single child through financial incentives and penalties, including loss of employment, and even forced abortions and sterilization.  This unpopular policy worked so well that the percentage of the population young enough to work shrank, while the percentage of old people grew.  People began talking about the “4-2-1 problem,” with four grandparents and two parents supported by one working-age adult.

A propaganda poster for the one child policy

It took 37 years for the central government to respond to the problem and change the law to the Two Child Policy in 2016.  When that didn’t work, they went to the Three Child Policy, which is still in effect.  But the harm had already been done, as the number of working age adults has declined and the percentage of elderly non-laborers has exploded.

The average family size in China decreased from 3.4 in 2000 to 2.6 in 2020, and the number of single persons living alone doubled between 2010 and 2020, to 8.9% of all households.  Disruptions to the traditional family were magnified when women increasingly entered the labor force.  They now represent about 45% of China’s workers. 

One unintended side effect was that “Soon after China implemented its one-child policy in 1979, reports reached the West of a new breed of plump, pampered creatures who had never learned to share. They were called Little Emperors, and nobody said ‘No’ to them.”

Social scientists who have studied the Little Emperor Syndrome describe such effects as egocentrism, selfishness, poor social skills, spoiled behavior, and a low tolerance for frustration. As an article in the UK newspaper The Guardian summed it up: “It was as if Britain had decided to spawn millions of Prince Andrews.”  (That’s not a good thing.  In case you don’t follow the fortunes of the House of Windsor, a few weeks ago Prince Andrew was formally stripped of his royal titles due to his associations with convicted sex offender Jeffrey Epstein.) 

But life is not all a bed of roses according to an article in the South China Morning Post entitled Little emperors to little slaves.  The 4-2-1 problem implies that many elders’ security ultimately depends on the financial success of a single working adult.  According to one Chinese teenager quoted in The Guardian article, “Our parents sometimes do lots of things that we should be doing for ourselves because they want us to concentrate on our grades.  For instance, my mom pushes my bike out of the door, presses the elevator button and waits for me to finish my breakfast and go out. It’s just study, study, study, study and nothing else.”

Another described working on grades 14 hours a day: “We wake up at 6:30 AM. We don’t have enough hours to eat: I skip my dinners for homework.”  Parental standards are high. “ It is common… to score 100% in a school test, then be urged to try harder next time.”

These standards are reinforced by China’s cultural emphasis on education as the key to success, as I explained a few years ago in a post entitled:  Do children in China study harder than Americans?  The short answer is: yes they do.  By a lot.

One 22 year old summed the consequences up like this: “It’s a huge burden for us, to take care of our mother and father. At our age, you have to start thinking about that. When I get married, my wife and I will have to take care of four old people, so I am deliberately screening out certain jobs already.”

And for young adults who don’t succeed in school and get a good job, the result is public failure.  According to Peng Zizhe, director of the Institute of Population Research at Shanghai’s Fudan University “it is not uncommon for people in their late 20s still to be living like children with their parents. They still get enough love from their mothers, so they don’t need to create a solid marriage unit.” 

If a parent loses their only child, it’s called the shidu parent tragedy because it leaves no one to support the elderly person.  What makes it a tragedy is the fact that China lacks the types of safety nets provided by Social Security and other systems in the US. 

A related change involves shifts “in the form of filial behavior. With more adult children working longer hours, living at a distance, or focusing on their own nuclear families, filial piety increasingly emphasizes financial support, frequent communication and occasional visits rather than full-time caregiver co-residence or daily obedience.”

Some experts on Chinese family structure now talk about two different types of filial piety:  the traditional duty based authoritarian model, and a more modern transactional model is built on “emotional attachments and intimate relations,” often referred to by the Mandarin word qinqing.”

A lengthy article in The Journal of Chinese Sociology by Yunxiang Yan reviews the way these sociological changes “are altering the ethical foundation of eldercare” by making a family’s history of qinqing the basis for how they treat their elderly parents.  In this view, family history becomes sort of a qinqing balance sheet.  What children will do for their parents in old age is based on how the parents treated them growing up.

The paper includes several case studies illustrating how this works, including one Mr. Guan, a widower in his 80s who complained at length “about his poor health, his unlucky fate, and how much he was suffering from his unfilial children.”  But when the researchers talked to other villagers, they learned Guan had a long history of “beating up his wife and children” and favoring one child over the others.  In the eyes of his neighbors, Guan got what he deserved.  He “had not paid attention to qinqing, so no one in his family looked after him in his old age.”  More generally, “family history and memories of individual experiences… may determine the quality of familial eldercare and its social sanctions by public opinion.”

Given all these changes, in 1996, the Eighth National People’s Congress adopted a 50 article law on the “Protection of the Rights and Interests of the Elderly.”  It required children to support their parents after the age of 59, including paying for medical care, providing nursing care, assuring proper housing and “not compelling the elderly to move to inferior houses.” In rural areas, grown children also had a “duty to help farm the land… and take care of trees and livestock” with all earnings going to the elderly. 

Most importantly, this law gave the elderly the right to “bring a lawsuit directly to a People’s Court… when [they] have disputes with their family members over their support, or over housing or property.”

You can imagine how well that went.  Over time, the law was supplemented by “family support agreements,” voluntary contracts signed by parents and children which can be legally enforced.  However, a 2011 study found that these agreements actually “harmed relationships and led to more family lawsuits, suggesting that authoritarian methods may not be effective in sustaining filial relations.” 

Yue Du’s 2023 book State and Family in China described how the Chinese government has repeatedly tried to rely on filial duty as a low-cost solution to the growing problem of an aging population.  There’s just one problem: it doesn’t work.  My reaction to this fact mirrors that of Captain Renault in the 1942 film Casablanca: “I am shocked.  Shocked I tell you.”

The lack of a Social Security type safety net, and the failure of alternatives, is one reason a New York Times article described China’s aging population as a “looming crisis” and Time magazine called it China’s “number one economic problem.”  For more on the implications, see my post entitled: Will China grow old before it grows rich?

The AI Race:  China vs US

A few weeks ago, the White House released a long awaited report entitled “Winning the Race: America’s AI Action Plan.”  The represents “a decisive pivot toward deregulation as the key driver for rapid innovation in pursuit of global AI leadership.” 

The reaction on both sides of the aisle has been quite positive and reflects a consensus among “technology executives, national security analysts, and U.S. officials” about the importance of AI.  Which is particularly surprising in 2025, at a time when Republicans and Democrats can’t seem to agree on whether the sky is blue.     

Even the Washington Post published an editorial endorsing the plan.  “The most important question for the United States regarding artificial intelligence right now is not how it will be used, or even how it will affect the economy and culture. It is whether the U.S. will maintain AI dominance. The race to own the technology of the future is a race we must not lose.”  Which is especially interesting given the Post’s anti-Trump bent and the fact that that this plan “noticeably steps back from the Biden administration’s attempts to identify and mitigate potential risks and pitfalls of [AI].”

The fundamental reason why AI is such a hot topic right now is that, as an opinion piece in Forbes put it, “AI has the potential to change the world as dramatically as the groundbreaking technologies that sparked previous industrial revolutions.”  Wait a minute.  As dramatically as the industrial revolution?  Isn’t all “this talk of the fourth industrial revolution just hot air from marketers talking up the share price of hugely powerful global corporations” the Forbes writer went on to ask.  Some of it is, he concluded, but the breakthroughs are real and are coming at a faster and faster pace.  Google CEO Sundar Pichai has repeatedly said that the impact of AI on humanity “will be even more transformational than fire.”

Many people first became aware of AI’s power with the release of ChatGPT in November 2022, a “large language model chatbot” that can carry on a conversation, write a thank you note to your grandmother, instantly research and compose a 20 page paper on King Ethelred the Unready, create a short story about how a frog developed its love of eating mosquitos, write computer code, and much more. 

If you haven’t already experimented with ChatGPT or one of its many competitors, you should give it a try, right now.  Put aside this blog for a few minutes, download the free version and prepare to be at first amazed and then a little scared at what the program can do.  And each new version keeps getting better.  (ChatGPT5 was released last Thursday, August 7.)

When I first wrote about ChatGPT and the risks of AI in this blog in July 2023, I asked the question “Should you worry about AI?” and answered myself “Unless your job is threatened, my answer is not at all.”  That was then, this is now.  You should worry.  In the last two years AI has become so much cheaper and more powerful that even the Pope is worried

And China is already having a major impact on how AI develops and how it is used.  The country’s “Next Generation Artificial Intelligence Development Plan” was announced in 2017 with the same goal as Trump’s plan: to dominate worldwide AI.  One way they are trying to do that is by competing on price, as the Chinese company DeepSeek did in January when it announced a new product that was so cheap it rattled the stock market.  In fact, the Deep Seek announcement “triggered a $1 trillion sell-off in U.S. and European technology stocks in a single day… [because its cost and popularity] have raised concerns about the future market share of established tech giants, leading to substantial declines in their stock valuations.” 

Since then, “Chinese companies have flooded the market with 1,509 large language models… often using open-source strategies to undercut Western competitors.”  The most dramatic so far was two weeks ago (July 28), the release of GLM-4.5, by the Chinese startup Z.ai.  It makes “DeepSeek look expensive [with]… an 87% discount on … long conversations with AI.” 

One of the most frightening things about all these new Chinese products is that since 2022, the US has been trying to slow Chinese progress by restricting the sale of advanced AI chips to China.  But the onslaught of new products shows that “export controls clearly aren’t slowing Chinese AI development. A blacklisted company [Z.ai] just delivered competitive performance while operating under restrictions designed to cripple such capabilities.”

Does this mean China is winning the AI race?  Foreign Affairs recently published several articles addressing this question in a far more nuanced way than the title of this post or any newspaper headline.  In “The Real AI Race” Rand experts Colin H. Kahl and Jim Mitre take the discussion back to basics by reminding readers that “determining who is ahead depends on what it means to win.”  They note that these days most experts define the race based on when AGI (artificial general intelligence) programs prove to be at least as smart as human experts. 

Unfortunately, however, “there is no standard, shared definition of AGI or consensus on whether, when, or how [AGI] might emerge.”  Nevertheless, most experts have long been bullish on how quickly it will appear.  When I first wrote about AI in this blog in 2022, I quoted AI pioneer Herbert A. Simon’s 1965 prediction that that “machines will be capable… of doing any work a man can do… within twenty years.”  He was wrong.

In 2023, when the consulting firm AIMultiple reviewed 15 surveys completed by a total of 8,590 AI experts about when they think AGI will actually exist, the most frequent answer was remarkably similar to Simon’s –  about 20 years.   More specifically, they found that 50% of AI experts predicted “that AGI will probably… emerge between 2040 and 2050 and is very likely (90% chance) to appear by 2075.”  That leaves 10% who think AGI emergence will take more than 50 years, if it ever occurs at all. 

You can put me in with the skeptical 10%.  Perhaps I was scarred by my own brief experience in AI in the early 80s, when I worked for a consulting firm on an ill-advised AI project for the US Army.  Or my skepticism could be grounded in my firm belief that we simply don’t know enough about the human brain to expect to improve on it.  When I earned a Ph.D. in Psychology, I spent countless hours reading about the major breakthroughs in neuroscience that were just around the corner.  Today, 50 years later, as far as I can tell they are still around the corner.  Some have described the brain as the most complex structure in the universe, with over 80 billion neurons, many connected to thousands of others at 100 trillion synapses.  It’s a miracle we can walk and chew gum at the same time.

Not only is the race to AGI uncertain to ever end, but it oversimplifies the problem.  As Kahl and Mitre concluded “The notion of a singular AI race between the United States and China fails to capture the true complexity of the rivalry unfolding today. The challenge is to win not one definitive contest but a multifront competition whose outcome will shape the international balance of power.”  Their article reviews multiple AI races, some of which may be won by the US and others by China. “Militaries and intelligence agencies must harness AI’s transformative potential and mitigate its disruptive effects. Similarly, countries stand to gain a competitive edge if they can adopt AI at scale across the economy and society. Governments are also battling to create and own the standards, supply chains, and infrastructure that will undergird the global technological ecosystem.”

Trump’s plan for American AI dominance is based on the US tech industry’s approach of developing proprietary AI models.  This is certainly the road to being able to charge the highest prices.  For example, Apple’s proprietary approach to iPhones and other products has enabled them to charge premium prices and become extraordinarily profitable.  But there also huge risks to the proprietary approach.  If you are old enough to remember the 1970s fight over standards in videotapes, you may have owned a Betamax recorder, which was Sony’s attempt to establish standards for this fledgling marketplace.  While it was widely regarded as technically superior to the competing VHS videotape format, Betamax lost out for several reasons including its higher cost. 

Given multiple AI races, does it make sense to try to choose a single winner?  Brad Smith, the president of Microsoft, thinks so: “The number one factor that will define whether the United States or China wins this race is whose technology is most broadly adopted in the rest of the world.”  Eric Schmidt, former CEO of Google, agrees and goes on to argue that “Chinese AI firms have expanded their influence by freely distributing their models for the public to use, download and modify, which makes them more accessible to researchers and developers around the world.”  And, Schmidt says, China “has developed a real edge in how it disseminates, commercializes and manufactures tech. History has shown us that those who adopt and diffuse a technology the fastest win.”

Trying to win the AI race by addicting the world to proprietary standards defined by US firms, the way Trump’s plan does, may be aiming in the wrong direction.  According to still another Foreign Affairs article published recently, “America should aim for victory but prepare to finish second… Washington cannot and should not expect its lead to last forever… Washington needs to plan for a possible future in which the United States loses the AI competition to China—or, at the very least, one in which Chinese AI models are as popular globally… Finishing second is not a death knell for American AI, but refusing to adapt to compete would be.”

The Robotics Race:  China vs US

According to the 2024 World Robotics report, over 4 million robots are currently operating in factories and warehouses around the world to increase the efficiency of tasks ranging from assembling cars to building more robots. 

Predictions for the future vary.  The OECD – an international organization with 38 member countries – “expects global growth [of the robotics market] to stabilize” at about 5% per year.  However, others foresee a dramatically higher growth curve.  Elon Musk has predicted that by 2040 there will be at least 10 billion humanoid robots on the planet. He also has claimed that the Optimus robot that Tesla is currently developing “will be the biggest product of all time by far… Nothing will even be close.”

The first time I read this quote, I saw Musk’s comments as a PT Barnum-type effort to increase the price of Tesla stock, so that the richest man on the planet could become even richer. (Wouldn’t you think $389 billion would be enough?)

But the more I learned about the ongoing robotics revolution, the more I came to believe that it is actually possible that humanoid robots COULD soon change the balance of industrial and military power.  But I wouldn’t bet on Musk or Optimus, because China is developing robots far more quickly and cheaply than the US.  

The exact line between industrial robots and other machines can be hard to define, but generally robots are more intelligent and autonomous than other machines and“often handle dirty, repetitive, or dangerous tasks to improve human safety and productivity.”  The line will be easier to see as the number grows of humanoid robots designed to resemble humans and interact with them.    

While the US is widely perceived as the world leader in robotics innovation, China has dramatic advantages in manufacturing and production.  And, according to the Special Competitive Studies Project, history has repeatedly shown that “even when original breakthroughs take place domestically, production determines market leadership.”

According to a recent think tank report with the ominous title America is missing the new labor economy – Robotics “China’s industrial economy is one of the most formidable players in the world, setting it up perfectly to reap the next evolutions of robotics and automation.” If a video is worth a thousand words, this will give you some sense of China’s current capabilities:   

This demonstration of 16 Unitree G1 robots performing a traditional Chinese folk dance alongside human dancers was televised during China’s 2025 Spring Festival Gala and viewed by over a billion people.

The robot shown in the video can perform a wide variety of functions, while walking at nearly five miles per hour and carrying seven pounds.  It was one of more than 25 humanoid robots that provided live demonstrations at Beijing’s 2024 World Robot conference.  At the same conference “the Tesla Optimus [which is scheduled to be released soon] remained motionless in a clear box.”

A humanoid robot has thousands of parts, with brains constructed from semiconductors, vision software and generative AI models, and bodies which include actuators, motors, drives to generate motion and much more.  Most of these parts are currently made in China, not in the US.  Indeed, “about 56% of the world’s humanoid supply chain companies are based in China.” 

According to the SemiAnalysis report “In the world of Robotics, manufacturing dominance is key. To build a complete and functional robot means recreating the robot countless times and fine-tuning each minor mistake until [it becomes] a solid, scalable, and cost-effective product… With a share of GDP three times higher than that of the US, China’s industrial base outcompetes that of America’s in every possible way.”  One result: “the only viable humanoid robot on the market, the Unitree G1, is now entirely decoupled from American components.”  In contrast, the report continues, “In the US, the ‘Made in America’ label is misleading at best, and downright harmful at worst. [It] allows for significant processing of foreign materials [which]… means a product can be labeled ‘Made in USA’ even if its core components originated in China, obfuscating the true extent of foreign dependence.”

Put these factors together, and China’s supply chain gives it enormous advantages in speed and cost. An article that came out a few weeks ago entitled “America is losing the robot wars“ noted that the Unitree G1 is available now for purchase starting at $16,000.  The Optimus is scheduled to go on sale next year, at an estimated cost of $20,000 to $30,000.  US general purpose robots may be the most technically advanced, but “one estimate suggests that [while] China’s general-purpose robots are roughly 80% as capable as industry leaders, [they] are also 30% cheaper.”

One reason behind this development is government support.  China’s “latest Five-Year Plan explicitly prioritizes humanoid development and automated manufacturing, backed by massive state investment and coordinated industrial policy. This isn’t just about economic efficiency – it’s a calculated bid to secure technological independence.”  While “exact numbers are hard to pinpoint… it is clear that the broad industrial landscape is benefiting from at least tens of billions of dollars every year.”  This support is proving critical not just for current costs, but also for future technological developments.  According to a Morgan Stanley report, in the past five years “China has secured 22% more [humanoid] robotics patents than the world’s 19 next most productive countries combined.”

Put all this together, and it is clear that the US has fallen behind China in the robotics race.  How much does that matter?  Much more than I thought before I started researching this post.  If the SemiAnalysis report is correct, it represents “an existential threat to the US” in both industrial and military terms.

An Edge of Automation white paper put it this way:  “The prospect of robots substituting [for] human labor transcends mere technological advancement – it threatens to shatter one of civilization’s oldest constraints: the scarcity of physical labor….”  For China this could address one of its greatest economic challenges:  an aging and shrinking workforce, caused largely by the country’s ill-advised “One Child Policy.”

That future is almost here.  For example, Chinese companies are experimenting with dark factories – fully automated facilities operated by robots without human workers or traditional lighting.  One dark factory operated by Xiaomi already “operates round-the-clock producing one smartphone per second – with zero humans employed.”

An even more pressing challenge for both countries is the potential for robotics to shift the balance of military power.  According to Edge of Automation “The Russia-Ukraine War has definitively proven that autonomous systems, particularly drones, represent a fundamental shift in military doctrine. Small, inexpensive drones have repeatedly outperformed traditional platforms costing hundreds of times more… [meanwhile] China’s aggressive adoption of military robotics… [such as the use of] Lynx [robot dogs] for ground operations… has accelerated this trend, creating a powerful feedback loop between defense needs and industrial capability…The result is an unprecedented acceleration of robotics technology, driven not by market forces but by the existential imperative of maintaining technological supremacy.”

The military applications of DEEP Robotics Lynx include reconnaissance, surveillance, logistical support, and search and rescue operations.   Some of its capabilities appear in this video:  

In the US, “The National Security Commission on Artificial Intelligence has explicitly warned that falling behind in robotics threatens America’s strategic position.”  This in turn has “unleashed unprecedented resources, from direct funding of research to export controls targeting critical components.”

But it is almost too late.  Think tank researcher William Matthews says that “China has positioned itself quite effectively… to dominate the robotics sector and the robotics supply chain… what you’re looking at potentially is an Industrial Revolution-like shift in the balance of power.” 

As one recent review summed it up “For now, the war over robots is China’s to lose.”

How rich Is Xi Jinping?

Exactly how rich is the President of the People’s Republic of China?  According to an April 2024 Congressional Research Service report based on public records: “Xi Jinping holds an estimated hidden wealth of $700 million.”  But wait.  Nobody really knows if this is correct.  Other published estimates place Xi’s total worth as high as $1.2 billion or as low as $1 million.

That’s quite a range:  the highest of these three estimates is 120,000 times larger than the lowest.  What’s behind this enormous disagreement?  Secrecy.

The estimates above refer to family wealth, not personal wealth.  That’s because in China, “generally the big corruption does not happen with the officials themselves, but with relatives of officials. Just being related to a big-wig means that people will throw money at you.”  Then add the fact that “Much of the family’s wealth remains unclear and untallied because of the absence of Chinese corporate and real estate disclosure rules, as well as a propaganda system that bans media discussion of leaders’ personal details and removes them from the internet.”

For example, around the time Xi first became China’s President, Bloomberg News journalist Michael Forsythe published an expose regarding Xi’s wealth.  Soon after “Forsythe and his family received death threats, and Bloomberg’s site was blocked within [China].”  This intimidation worked.  As a result of the reaction to Forsythe’s piece, “Bloomberg declined to publish a subsequent investigation…”

Despite the difficulty of coming up with a reliable total figure, it is very clear that Xi lives a VERY comfortable life, including:

Also note that in China, “for very high ranking officials [in China], all things for their entire life are provided by the government… [and they] do not have much opportunity to use their own money” for living expenses.  But the world is full of luxuries and many Chinese leaders and their families don’t seem to have trouble finding things to spend their excess money on. 

Some examples can be seen in a Twitter account started in 2022 by Xi’s only child — his 32 year old daughter Xi Mingze (nicknamed Xiao Muzi) — showcasing her lavish lifestyle including:

  • A Van Cleef &  Arpels’ bracelet valued at over $135 thousand (US)
  • A custom Patek Philippe diamond watch worth $1 million (US).  (Normally, this particular watch is reserved for VIPs who spend over $5 million annually on this brand.)
  • A customized Rolls-Royce Cullinan worth $28 million (US)
  •  $100 million (US) mansion in Hong Kong
  • And much more
In 2022 Xi Mingze – Xi Jinping’s only child – posted these images to a Twitter account illustrating her luxurious lifestyle.  In 2023, they were deleted from the internet.

But Xi Mingze’s posts on luxuries ended “on September 25th 2023 when her Twitter account was exposed by Luda media.”  As a result, Xi Mingze “allegedly [issued] a death threat against Luda media indicating that any harm coming to the media network would be her family’s doing.”

Some US politicians seem to believe that if the facts become available “about the enormous wealth of individual leaders of the CCP, the Chinese people will turn China into a respected democracy like Taiwan.” 

For example, “Sen. Marco Rubio inserted language into… the 2023 National Defense Authorization Act… which required the US Director of National Intelligence to produce a ‘Report on the Wealth and Corrupt Activities of the Leadership of the CCP’” by December 2023.  The report would investigate not just “Xi Jinping… [but also] other members of the Central Committee, the Politburo, the Politburo Standing Committee, and regional Party Secretaries.”

Interestingly, as of the date of this post — 10 months after the publication deadline had passed — the report yet to be published.  My personal guess is that Avril Hines – Director of National Intelligence – is slow walking the report, at least until after the Presidential election. 

If all of the info on Communist leaders’ wealth was fully vetted by US intelligence, and released as part of a well-thought out strategy to manage the contentious US-China relationship, perhaps it might make a difference.  But in this case it feels more like an isolated action poking Xi Jinping in the eye with a stick, to show the world that we’re right and he’s wrong.  In my opinion, Cruz and his allies range from naïve to downright stupid if they really think that such a report would convince Chinese citizens that they would be better off in a Taiwan-style democracy. 

When (or if) this report is published, it will almost certainly prove that Xi is just one of many leaders who live luxurious lifestyles on the backs of the Chinese people.  In fact, Xi’s offenses are likely to be relatively modest compared to some others.  Since coming to power in 2012, Xi has focused on anti-corruption campaigns and earlier this year, he vowed to intensify this campaign and “target industries such as finance, energy and infrastructure.”

Corruption is a long-standing tradition in China, going back thousands of years, at least to Qin Shi Huang, the first Chinese emperor in 259 BCE.    

After the Chinese Communist Party won its revolution in 1949, many Party leaders lived the high life.  Numerous examples appear in the controversial book “The Private Life of Chairman Mao,” written by Mao’s long-term personal physician Li Zhisui, including:

  • “Luxuries not even imaginable to the Chinese citizenry, [such as] owning numerous estates, and having numerous extramarital affairs with very young women and even boys”
  • “Like Chinese emperors of antiquity, Mao believed that regular sex ensured a long life and had at least 3,000 concubines over his lifetime… He aimed to have sex with a different virgin girl every night.
  • He was also “a gourmet… [whose] favorite foods were flown to Beijing from all over the country, including a special kind of fish [that needed to be] kept alive in a plastic bag filled with water and accompanied by a servant responsible for administering oxygen.

I don’t know about you, but it feels more than a little odd to me that the heads of the largest Communist nation on Earth would have access to privileges denied China’s 1.4 billion residents.

When Karl Marx and Friedrich Engels published the Communist Manifesto in 1848, they focused on “the exploitation of the proletariat (working class of wage laborers) by the ruling bourgeoisie.”  They did not mention the possibility that the success of the Communist Party could create a new class of leaders who would exploit the proletariat.

In 1887, English historian Lord Acton wrote “Power tends to corrupt, and absolute power corrupts absolutely.”  It’s still true.

So, in my opinion, the fact that many of China’s leaders are rich while more than a billion of its citizens are poor is not surprising.  The fundamental causes lie not in communism or in capitalism, but in human nature. 

The possible role of human nature in inequality will be the basis for a number of posts in my soon to be updated “other blog”:  Understanding US economic inequality, five minutes at a time.

Taiwanese TV drama envisions war with China

Two weeks ago, a Taiwanese TV station released a trailer for “Zero Day,” a dramatic series about a fictional war with China.  It has already been viewed over 1.4 million times on YouTube.

The preview presents a rich and riveting view of the steps leading to war.  The details are so realistic that a YouTube commenter from the Ukraine described one scene as “Exactly what happened at my home … in Kharkiv… when Russia attacked.” 

The ten-episode series says little about how or even whether the US gets involved.  Instead, it imagines events within Taiwan during the seven days leading up to war. Characters in the drama respond to the threats in a variety of ways, including fight, flight, and utter confusion.

In one scene, a fictional social media influencer urges her countrymen to side with China, as shown below:

A fictional Taiwanese social media influencer in the TV series “Zero Day” says “Taiwanese people shouldn’t fight their own people…You think we could win?  We know we can’t.  That’s why we’re so afraid.  Those who ask you to go to the battlefield… they don’t give a shit about our suffering.”

Several other scenes show criminals being released from Taiwanese prisons at the behest of China, since “China has long been infiltrating the underworld and social organizations.”  They immediately begin committing crimes which contribute to the chaos and magnify social unrest.

This 17-minute trailer (in Mandarin with English subtitles) begins when a PLA (People’s Liberation Army of China) Y-8 military transport “mysteriously disappears” from radar near Taiwan.  China imposes a naval blockade on the island, under the pretext of a search and rescue operation.  Within a few days, all international shipping has been blocked from the Taiwan Strait, Taiwan’s stock market has cratered, there’s been a run on the banks, ATMs have stopped working, and the US and other countries have begun trying to evacuate their citizens from Taiwan.

Chaos continues to grow.  Four days before the war begins, according to the film, “Hacker attacks and spy sabotages have led to random water, power and internet disruptions.”  The Prime Minister of Taiwan then gives a national address about the need to defend the country, saying “Without freedom Taiwan is not Taiwan.”  But midway through the speech, the TV broadcast is hacked and an AI deepfake of the Prime Minister declares war on China.  The hacked broadcast then switches to an announcer in China, who says “The PLA guarantees all Taiwanese people will be fully protected… When you encounter a PLA soldier, first raise your hands high to show you are not armed… Second, please report to the PLA if you know any hidden pro-independence activists.”

The final day before war begins is described by the film as “Total chaos… [including] shortages of supplies, complete interruption of water, electricity and telecommunications.  The fleeing starts.” The preview ends the day war begins, with an ambiguous picture of armed soldiers hiding in a field in Taiwan. 

If you want to know what happens next in the TV series, you will have to wait for it to be released in Taiwan in 2025.  You may even be able to see it in English; according to CNN “the production team is… in the early stages… of discussions with streaming services including Netflix for a potential international release.”

This is the first TV series in Taiwanese history to dramatize a Chinese invasion. It is scheduled to finish production in November and go on Taiwanese TV sometime in 2025.  The film is highly professional, and even inserts some humor into tragic situations.  For example, while helping her husband pack to flee Taiwan, one young woman says in amazement “We are running for our lives here, and you are packing condoms?”  His answer: “Maybe we’ll need them when we get bored.”

When CNN interviewed producer Hsin-mei Cheng about the series, she said she was “worried that her fellow Taiwan citizens have grown ‘too numb’ to the danger of an impending conflict… I hope the show can serve as a wakeup call to the Taiwanese people: what should we do when we still have the right to choose?”

There is no issue that is more important to US-China relations, and maybe to the fate of the planet, than the future of Taiwan.  I have described the background in three previous posts:  in 2021 (The Taiwan Conundrum), 2022 (The sheer stupidity of Nancy Pelosi’s trip to Taiwan) and 2023 (Is war over Taiwan inevitable?).  My main conclusions were:

1) Since Communists took control of the mainland in 1949, they have been extremely consistent and emphatic about their plans to make Taiwan part of China.  As Xi Jinping stated a few months ago in his New Year’s Eve address to the nation, “The reunification of the motherland is a historical inevitability.”

2) When it comes to responding to an invasion of Taiwan, the US has a policy of “strategic ambiguity.”  Under this purposely vague policy, the US strongly supports Taiwan both politically and militarily, but does not guarantee that it will help defend Taiwan if it is attacked.

    In the 15 months since my most recent post on Taiwan, things have only gotten worse.  On May 20, Lai Ching-te was inaugurated President of Taiwan.  When Lai was Premier of Taiwan, he had “made headlines in 2017 by describing himself as ‘without a doubt… a politician who supports Taiwanese independence’ and [also said that he would] never change this stance, no matter what office I hold.’”

    However, like almost every politician in the history of the world, Lai later changed his mind to get more votes.  Although he has “shifted his stance on Taiwan’s independence multiple times,” China still “considers Lai a dangerous separatist.”

    The Institute for the Study of War publishes a “China-Taiwan Weekly Update” to report on military and political tensions, including incursions by Chinese military aircraft into the Air Defense Identification Zone (ADIZ), an area over and around the island. According to their most recent update (published on August 2):  “The PRC conducted at least 439 military incursions into Taiwan’s Air Defense Identification Zone in July 2024, surpassing all previous months except August 2022… [when China] conducted… massive military exercises in response to then-US House Speaker Nancy Pelosi’s visit to Taiwan… July [was] the third consecutive month of significantly higher and rising numbers of ADIZ incursions… [since]Lai Ching-te took over.”

    In response, “Taiwan’s government has been trying to improve its defenses by extending mandatory military service and revamping ongoing training for reservists as part of a broader shift in defense strategy designed to make Xi think twice before taking a gamble on use of force.”

    No one in China or Taiwan or the US knows when or even if China will act to take over the island it considers a rightful part of its nation. 

    I believe that Xi Jinping will continue to stand by a statement he has often repeated from former Chinese president Jiang Zemin that “Chinese will not fight Chinese.”  I have no doubt that China will one day achieve its goal of reunifying with Taiwan, almost certainly before the Communist government’s 100th anniversary in 2049.  But I also believe they will wait for a relatively peaceful opportunity, act suddenly, and avoid the catastrophes depicted in “Zero Day.”

    Climate change and China

    Four years ago, when I last wrote in this blog about climate change, the threats seemed ominous but solvable.  As you know, since then it’s only gotten worse.

    As one expert summed it up “every one of the ten hottest years in recorded history occurred during the past decade… In the United States, billion-dollar catastrophes—including wildfires, severe storms, and flooding—struck on average every two to three months during the last two decades of the twentieth century. Now they occur on average every two to three weeks.”

    The gold standard for measuring progress in fighting climate change was established in 2015 when 196 countries signed the Paris Agreement.  It aimed to limit the increase in average global temperature to a maximum of two degrees Celsius (or 3.6 degrees Fahrenheit) over pre-industrial levels.  But it now looks like the actual increase will fall between 2.1 and 3.4 degrees Celsius before 2100.  And that assumes that governments actually do what they agreed to in Paris.  So far, very few have.

    No one knows what the long-term effects may be, since as noted in a recent Foreign Affairs article “the world has not experienced a temperature rise of 2.5 degrees Celsius for more than three million years.”  But many experts still believe that, as an article in the Washington Post recently put it there is “a glimmer of hope that averting the worst of climate change might still be possible.”  Technical solutions do exist; we just need governments to take the necessary steps.

    In the US, progress depends on who wins the next election.  Under President Biden, “Congress finally delivered transformative legislation to tackle the climate crisis… after decades of effort ending in failure, near-misses or small wins…  The 2022 Inflation Reduction Act invests hundreds of billions of dollars in clean energy, electric vehicles, environmental justice and more.”

    Meanwhile, “Donald Trump [has] repeatedly called climate change a ‘hoax’ [and] he spent every single year in office gutting and undermining environmental protections and regulations.”  At a Mar-a-Lago fundraiser in May, Trump “pledged to scrap President Biden’s policies on electric vehicles and wind energy, as well as other initiatives opposed by the fossil fuel industry.”  There was just one little catch:  oil executives need to raise $1 billion for his presidential campaign.  A few weeks later, Trump held a $250,000 per person fundraising dinner in Houston where he offered to “lift the natural gas export ban, cancel all unnecessary energy-killing regulations … open up more federal lands” and also “immediately reverse Biden’s pause on approvals of new liquefied natural gas exports.” 

    In China, there is no such debate on climate change policy.  In 2020, “Xi Jinping pledged to ‘peak carbon dioxide emissions before 2030’ and ‘achieve carbon neutrality before 2060’.”  And what Xi wants, he usually gets. 

    According to a New York Times piece entitled “Xi Thinks China Can Slow Climate Change. What If He’s Right?” China hopes to “dominate the global transition to green energy, with his one-party state acting as the driving force in a way that free markets cannot or will not. His ultimate goal is not just to address one of humanity’s most urgent problems — climate change — but also to position China as the global savior in the process.”

    The good news is that in many ways, China has started to succeed by becoming “the world’s leading manufacturer of climate-friendly technologies, such as solar panels, batteries and electric vehicles.”  Specifically, “more than half of all new solar power installed in the world last year was installed inside China. For wind power, the share was even larger: China was responsible for 60 percent of all new global capacity.”  China now “produces 84 percent of the world’s solar modules… produces 89 percent of the world’s solar cells, 97 percent of its solar wafers and ingots… 87 percent of its battery cathodes, 96 percent of its battery anodes, and 91 percent of its battery electrodes.” 

    Similarly, when it comes to electric vehicles, in the last five years, China’s electric vehicle exports have grown 8,500 percent.  The country has become “the world’s top exporter of all cars. [In addition] nearly 60 percent of all the world’s electric vehicles are now sold in China.”

    How did they do it?  Dictatorship.  Profits matter less than policy in China and their “electric vehicle industry [was] built on subsidies.  For example, Chinese company Nio – one of the largest electric vehicle manufacturers in the world – loses something like $35,000 for every car it sells… [But the company has] formidable government backing that allows them to withstand such losses and keep growing.” 

    Admittedly this progress poses risks to the US.  Chinese government subsidies – along with relatively low priced labor — enable manufacturers to offer electric vehicles at very low prices.  The New York Times has reported that “BYD, a Chinese automaker, just rolled out a model priced under $10,000.”  Even if this car was offered at twice that price in the US, according to M.I.T. economist David Autor, “There are few things that would decarbonize the U.S. faster than $20,000 electric vehicles. But there is probably nothing that would kill the U.S. auto industry faster, either.”

    Another troubling effect of this progress is that “China controls more than 80 percent of many essential aspects of the global clean-energy supply chain; the United States controls almost none of it.”  This includes “minerals such as cobalt, copper, lithium, nickel, and rare earths, which are critical to various clean energy technologies, including wind turbines and electric vehicles.”

    These could be serious challenges to US power.  But if the other alternative is to let climate change progress until the entire planet burns, these risks seem a small price to pay.

    Still it is important to remember that there are some major problems with Chinese environment policy, chief among them is the fact that “China remains addicted to coal, the dirtiest fossil fuel” and is “the world’s largest greenhouse gas emitter, responsible for nearly 30 percent of global carbon dioxide emissions.”

    Theoretically, China is committed to reducing its reliance on coal. But “209 new coal power plants are either under construction or permitted in China, which accounts for 72 percent of the world’s planned yet unbuilt capacity.”

    At this time, “roughly 65 percent of China’s electricity supply comes from coal, [and in recent years] China [has] dramatically expanded its use of coal-fired power plants.”  Because of this, increasing electric vehicle use within China could have the ironic effect of increasing the country’s total emissions.  Every time a car battery is recharged, it requires burning more coal to generate more electricity.  As a result, “one million plug-in electric cars using China’s power grid could, in many parts of the country, emit roughly as much carbon dioxide as one million gasoline-powered passenger sedans.”

    Given this contradiction, “Beijing is approaching a decision point. Xi Jinping’s momentous decision in 2020 to announce the goal of carbon neutrality by 2060 now needs to be given teeth. By next year Beijing’s policymakers must chart a national decarbonization path for the next decade…”  This must begin by enforcing existing guidelines for future coal use.  In response to power outages and other problems, in the last few years “coal power project approvals [have] soared, [and] authorities are not following or enforcing the [published] policy to control new projects.”

    In theory, other countries could influence China by imposing “carbon taxation—a levy on goods or services corresponding to their carbon footprint, or the emissions required to make them.”  But what are the chances that all the major countries in the world can agree on this, at a time when they don’t seem able to agree on anything?

    Put it all together, and “China’s climate policy is the single most important political factor deciding the future of the global environment.”  We can only hope that Xi Jinping will do what he has promised and achieve carbon neutrality by 2060.

    Chinese espionage

    The Chinese are spying on us.  Which seems only fair, since we are spying on them too.

    You probably remember last year’s journalism hysteria when a Chinese surveillance balloon floated over the US, and the Air Force shot it down off the cost of South Carolina.  In the big picture, that was a mere kerfuffle, a foofaraw. 

    But don’t be fooled.  Chinese espionage offers plenty to be worried about.  In a 2020 speech, FBI Director Chris Wray called “the counterintelligence and economic espionage threat from China… the greatest long-term threat to our nation’s information and intellectual property, and to our economic vitality.”

    Since 2020, it’s only gotten worse.  Last October, the heads of intelligence from the US, Canada, UK, Australia and New Zealand – the Five Eyes Alliance – held “an unprecedented joint news conference to warn of… a ‘breathtaking’ Chinese effort to steal technology and economic intelligence and to influence foreign politics in Beijing’s favor.”  According to the FBI’s Wray,  the purpose of this first press conference in the organization’s 80 year history was to warn that the threat from “China’s espionage…  has only gotten more dangerous and more insidious in recent years… The FBI currently has over 2,000 investigations in progress that are linked to China.”

    At the same conference, Ken McCallum, the Director General of Britain’s MI5 spy agency reported several examples of his own, including the fact that “suspected Chinese agents have approached over 20,000 people in the UK over professional networking sites like LinkedIn, in order to try to cultivate them to provide sensitive information.”

    There are two main reasons why it is very difficult for the West to keep up:  China devotes more resources to espionage, and they are playing by different rules than we are.

    Regarding resources, Wray testified before a US House committee on January 31 that, “If you took every single one of the FBI’s cyber agents [and] intelligence analysts and focused them exclusively on the China threat, China’s hackers would still outnumber FBI cyber personnel by at least 50 to 1.”

    Chinese hackers work not just as government employees, but also for private Chinese companies that specialize in spying.  A few weeks ago, leaked documents from the Chinese security firm I-Soon recently revealed a price list of what they charged.  If you want to hack Twittter/X accounts and run a disinformation campaign, for $100,000 I-Soon will sell you specialized software to make your targeting and lying more efficient.  Do you want a huge database of personal information entered by unwitting users of Facebook and Telegram?  For $278,000 that too can be yours.

    In addition to devoting greater resources to espionage, China’s authoritarian government is also playing by different rules.  Harvard’s Calder Walton summarized key differences in a recent article in Foreign Policy magazine:  “Unlike those in Western democracies, China’s intelligence services are not held to account by independent political bodies or the public, nor are they subject to the rule of law… Thanks to successive national security legislation passed under President Xi Jinping, Chinese businesses are required to work with its intelligence services whenever requested to do so… [In addition] facial recognition, phone apps, and CCTV all make China an infinitely harder target for Western agencies to collect intelligence on than Chinese services’ targets in open Western democracies.”

    And if that’s not enough, according to David Vigneault, the director of the Canadian Security Intelligence Service, Chinese laws require its citizens “anywhere in the world to provide information to Beijing’s intelligence services.”

    Just a few weeks ago, the FBI’s Wray updated Congress on one major cyber operation which he described as part of “the defining threat of our generation.”  In the Volt Typhoon project “Chinese hackers [have targeted] critical infrastructure in the U.S., such as water treatment plants, electrical grids, oil and natural gas pipelines and transportation systems.” 

    The result of operations like Volt Typhoon, according to Congressional testimony by Jen Easterly, Director of the US Cybersecurity and Infrastructure Security Agency, is that “A major crisis halfway across the planet could well endanger the lives of Americans here at home through the disruption of our pipelines, the severing of our telecommunications, the pollution of our water facilities, the crippling of our transportation modes all to ensure that they can incite societal panic and chaos and to deter our ability to marshal military might and civilian will.”

    Your home network could be unwittingly aiding a massive Chinese espionage operation, if your router has been infected by KV Botnet malware.   

    The primary methods behind this particular operation relied on human flaws “by exploiting vulnerabilities in small and end-of-life routers, firewalls and virtual private networks, often using administrator credentials and stolen passwords, or taking advantage of outmoded tech that hasn’t had regular security updates – key weaknesses identified in US digital infrastructure.”

    If you have an old Cisco or Netgear router running your home or small business network, it may have been infected by “KV Botnet malware” planted by the Chinese. If so, your router was “chained together [with other infected routers] to form a covert data transfer network supporting various Chinese state-sponsored actors including Volt Typhoon.”  

    Yikes.  Your innocuous little home network could be helping the Chinese to hide the origin of an infrastructure attack someday, since “the botnet’s distributed nature makes the activity hard to trace.”  This is a prime example of the way “state-sponsored cyber actors are seeking to pre-position themselves on IT networks for disruptive… cyberattacks against US critical infrastructure in the event of a major crisis.”

    In December, the FBI fought back with a court-ordered action to “delete the KV Botnet malware from the routers.”  But if you restarted your router after the cleanup, your server will once again be vulnerable.  This is one of several reasons that experts say “the legal action is bound to be a only temporary disruption.”

    To put it another way, the potential effects of Chinese espionage continue to rise.

    In an article entitled “Spycraft and Statecraft,” William J. Burns, the director of the Central Intelligence Agency wrote in the current issue of Foreign Affairs that “This is a time of historic challenges for the CIA and the entire intelligence profession, with geopolitical and technological shifts posing as big a test as we’ve ever faced. Success will depend on…  adapting to a world where the only safe prediction about change is that it will accelerate.”

    To address the China challenge, Burns reported that the CIA has more than doubled “the percentage of our overall budget focused on China over just the last two years. We’re hiring and training more Mandarin speakers while stepping up efforts across the world to compete with China, from Latin America to Africa to the Indo-Pacific.”  The New York Times reported that, “The C.I.A. and the Pentagon’s Defense Intelligence Agency have [also] set up new centers focused on spying on China. U.S. officials have honed their capabilities to intercept electronic communications, including using spy planes off China’s coast.”

    Meanwhile, the American and Chinese economies continue to get more intertwined.  At the height of the Covid epidemic, many Americans learned for the first time that the US depends on China for things like surgical masks, personal protective equipment, respirators and many other medical products needed to fight the disease.  In the early stages of the pandemic, when world supplies were short, China wouldn’t share them.

    The top ten products the US imports from China today include lithium batteries, display monitors, smartphones, digital automation systems, pre-dosed medications and data processors.  Good luck to all of us if access to these and other Chinese products was cut off during a crisis.

    So, at the same time that we continue to compete with China politically and economically, we must simultaneously cooperate and work together to tackle existential challenges to the human race including climate change and avoiding nuclear war.

    Last year, Pulitzer Prize winning reporter Thomas L. Friedman visited China for the first time since covid to try to get a grip on what all this means.  Hu Xijin, one of China’s most popular bloggers, said to him: “You have been in the first place for a century, and now China is rising, and we have the potential to become the first — and that is not easy for you… [But] you should not try to stop China’s development. You can’t contain China in the end. We are quite smart. And very diligent. We work very hard. And we have 1.4 billion people.”

    Based on this and many other interviews, Friedman concluded: “I believe that [China and the US] are doomed to compete with each other, doomed to cooperate with each other and doomed to find some way to balance the two. Otherwise we are both going to have a very bad 21st century.”

    China’s vision for a New World Order

    Since at least 1945, international relations have been dominated by the “liberal world order,” a set of global rules defined by the United Nations, the World Trade Organization, the World Bank, and other groups.  As the world’s largest and most powerful nation, the US has played a leading role in establishing and enforcing these rules.  For all of us who lived through Vietnam, Iraq, Afghanistan, Gaza and more, the last eight decades have not always felt peaceful.  But from a big picture view, the 80 years since World War II have been one of the most prosperous and peaceful periods in human history.

    To some countries, this “liberal world order” now feels outdated and “ill equipped to handle pressing global problems such as climate change, financial crises, pandemics, digital disinformation, refugee influxes, and political extremism.”

    Chief among the critics is China, and for the last several years Xi Jinping has been promoting a vision of an alternative “new world order.”  In many ways, it is based on the approach that China itself used to lift 850 million people from poverty and become the second largest economy in the world.   

    Among other things, the Chinese model holds that “developing countries have a right to focus on feeding, housing and giving jobs to people, rather than fussing about multi-party elections.”

    As I wrote five years ago in one of the first posts in this blog, “For countries that are still stuck in poverty, democracy is not a priority.  As William Overholt put it in his book China’s Crisis of Success (p. 8), ‘If you are malnourished and ill and illiterate and your children are at risk, participating in an election doesn’t help much…. [In India’s democracy], a malnourished illiterate 12 year old girl whose mother died in childbirth… and whose father is crippled by air pollution far more debilitating than China’s, who has never seen a toilet and who was forcibly married to an old man, will have the right to a vote, but is that really what’s most important to human dignity?’”

    Perhaps the most important difference between China’s vision of world order and that of the West is the very definition of the phrase human rights.  Beijing argues that “governments’ efforts to improve their people’s economic status equate to upholding their human rights, even if those people have no freedom to speak out against their rulers.”  To put it another way, “Xi seeks to flip a switch and replace [Western] values with the primacy of the state. Institutions, laws, and technology in this new order reinforce state control, limit individual freedoms, and constrain open markets.”

    One result of this position is that “China has pushed to strip UN resolutions of all references to universal human rights.” And when Westerners criticize China for sending as many as one million Muslim Uighurs to prisons and re-education camps, China has two replies:  1) the West is defining “human rights” in a way that does not apply to the third world and 2) our internal matters are none of your business.

    As Yun Sun, the director of China programs at the Stimson Center, put it: “What the Chinese are saying … is ‘live and let live.’  You may not like Russian domestic politics, you might not like the Chinese political regime — but if you want security, you will have to give them the space to survive and thrive as well.”   

    China also argues that when the UN was formed more than 70 years ago, undeveloped countries had little power and little influence.  Nobody asked them how they defined “universal human values,” and different civilizations actually have different perceptions of human values. 

    Last March, at Beijing’s “Global Civilization Initiative,” Xi Jinping gave the keynote address to 500 leaders from 150 countries, such as Afghanistan, Bangladesh, Bolivia, Iran, Russia and Uganda.  (The US, UK, Germany, France and other leading Western powers were conspicuously absent and presumably not invited.) 

    Xi explained how China is working to “bring new hope for all nations to consider together on how to escape the trap of the ‘Clash of Civilizations’ and find a path that can help the world sail through the current turbulence.”  In China’s new world order: “Countries wouldn’t impose their own values or models on others.” 

    Xi Jinping giving the keynote address to 500 leaders from 150 countries at Beijing’s “Global Civilization Initiative” in March 2023.

    Tufts political scientist Michael Beckley noted in Foreign Affairs, that “China is [now] positioning itself as the world’s defender of hierarchy and tradition against a decadent and disorderly West.”  Beckley went on to point out that “the strongest orders in modern history—from Westphalia in the seventeenth century to the liberal international order in the twentieth—were not inclusive organizations working for the greater good of humanity. Rather, they were alliances built by great powers to wage security competition against their main rivals… Fear of an enemy, not faith in friends, formed the bedrock of each era’s order… [and alliances] tapped into humanity’s most primordial driver of collective action… ‘the in-group/out-group dynamic.’”

    Mark Leonard, Director of the European Council on Foreign Relations calls China’s new world order “an audacious strategic bet [preparing] for a fragmented world… that allows other countries to flex their muscles.  [This] may make Beijing a more attractive partner than Washington, with its demands for ever-closer alignment. If the world truly is entering a phase of disorder, China could be best placed to prosper.”

    In a sign of China’s attempt to promote their alternate version of world order, Xi chose not to attend the summit of G20 presidents and premiers from the US, UK, France, Germany – including Joe Biden.  As the headline of an article in the Atlantic put it:  “Snubbing the G20 is just the beginning. China wants to replace it.”

    Just a few weeks before G20 meeting, Xi Jinping did travel to South Africa for the annual meeting of BRICS, a group of 150 developing nations that represents over 40 percent of the world’s GDP.  It was founded by Russia in 2009, and excludes the US, UK, and other Western powers.  China said that “Countries should ‘reform global governance’ and stop others from ‘ganging up to form exclusive groups and packaging their own rules as international norms.’”

    The best example of how this new world order is playing out today may be the war in the Ukraine.  A few days before Russia’s invasion, as Russian troops assembled along Ukraine’s border, Chinese Foreign Minister Wang Yi said that “Sovereignty, independence, and territorial integrity of all countries should be respected and safeguarded.”  One week later, after the invasion occurred, China changed this view to “defend Moscow’s actions, in the name of ‘legitimate security concerns.’”

    While China has carefully distanced itself from military action in Ukraine, the economic sanctions against Russia have led them to switch “from the West to China for everything from cars to computer chips.”  As a New York Times headline put it a few weeks ago, the “War in Ukraine has China Cashing In.”

    In the world of Realpolitik, if you examine what China and the US have actually done in recent years, as opposed to what they have said, neither side is living up to its public statements.  Despite China’s theoretical commitment to each nation being left alone to pursue its own course, Kevin Rudd, Australia’s ambassador to the US, noted in Foreign Affairs that even before the war in Ukraine: “China has embarked on a series of island reclamations in the South China Sea [despite territorial disputes with Vietnam, the Philippines, Malaysia, and Brunei] and turned them into garrisons, ignoring earlier formal guarantees that it would not. Under Xi, the country has carried out large-scale, live-fire missile strikes around the Taiwanese coast, simulating a maritime and air blockade of the island… Xi has [also] intensified China’s border conflict with India… and embraced a new policy of economic and trade coercion against states whose policies offend Beijing and that are vulnerable to Chinese pressure.”

    Actions like these have “undermined [China’s] push for leadership. A survey of Southeast Asian experts and businesspeople found that less than two percent believed that China was a benign and benevolent power, and less than 20 percent were confident or very confident that China would ‘do the right thing.’”  

    Many countries believe that the US is just as hypocritical: “the West has applied its norms selectively and revised them frequently to suit its own interests or, as the United States did when it invaded Iraq in 2003, simply ignored them. For many outside the West, the talk of a rules-based order has long been a fig leaf for Western power.” 

    At a meeting last April with the president of the European Council, Xi Jinping stressed how colonial powers treated China in the 19th and 20th century, including forcing China to cede territory and set up separate enclaves for Europeans that lived in key Chinese cities.  Not to mention World War II atrocities such as Japan’s 1937 massacre of up to 300,000 Chinese civilians in Nanjing.  This type of aggression “left the Chinese with strong feelings about human rights, [Xi] said, and about foreigners who employ double standards to criticise other countries.”

    The most fundamental question about China’s vision is one which only the future can answer:  “Is China really trying to promote multipolarity — or does China just want to [become a] substitute [for] US influence over the world?”

    China’s savings problem

    As explained in my previous post, China is in trouble.  A recent CNN article summed it up like this:  the economy “is stalling… a real estate crisis is deepening and exports are in a slump. Unemployment among youth has gotten so bad the government has stopped publishing the data.”

    One of the factors that is holding the economy back is that Chinese households save too much: about 46% of their disposable income.  This is more than ten times higher than the US household saving rate of roughly 4%.   According to Forbes, “the high Chinese household savings rate has no peer among major economies.”

    Wait a minute.  The Chinese save too much?  My parents, who grew up during the Great Depression (1929-1941), would have thought that impossible.  But according to John Maynard Keynes’ “paradox of thrift,” when people don’t spend enough, demand decreases, production decreases, and the entire economy slows down.

    As a result, according to many economists, “Unleashing domestic consumption is the surest path for China to achieve its goal of becoming the world’s largest economy, anchored by the world’s largest middle class, by 2035.”

    Why are Chinese saving habits so different from our own?  As I have often argued in this blog, the answer begins with cultural differences.  According to the Tao Te Ching, written about 400 BC, “the three greatest treasures one can have are love, frugality, and generosity.”  Confucius also wrote about the benefits of being cheap, when he said:  “He who does not economize must agonize.”  If you think writings from 2,400 years ago are irrelevant to current behavior, consider the fact that Zhou Xiaochuan, former Governor of the People’s Bank of China (2002-2018), has said that “his country’s high saving rate as in large part the product of Confucianism, which values thrift, self-discipline, moderation, and an aversion to extravagance.”

    In modern times, just as my parents learned the importance of saving during the Depression, many Chinese parents and grandparents learned to save during the famines and economic uncertainty of life under Mao, and in the rapid changes rooted in the marketing reforms initiated by Communist party leader (1978-1989) Deng Xiaoping.

    You might think Chinese citizens should be less worried about money today, since Deng’s reforms have lifted 850 million people out of poverty.  But, according to an August New York Times article, “Chinese consumers [are still] afraid to spend, due in part to the government’s years of inattention to building an adequate safety net for seniors, the jobless and others in financial stress.” 

    The article goes on to argue that safety net problems were made worse by China’s strict and expensive “zero covid” policies, given the high cost of testing, surveillance and quarantines.  “Many local governments have been cutting residents’ health benefits this year after anti-Covid measures depleted municipal health insurance funds in 2022. Health coverage reductions have triggered street protests in cities like Wuhan, Guangzhou and Dalian.”

    Economic challenges are also common for the elderly. “Faced with a rapidly aging society and a national pension fund that is expected to run out of money by 2035, the central government has also cut back on increases in payments to seniors.”

    Many economists had predicted that when the covid lockdown ended, China would experience the same kind of revenge spending seen in the US, where people bought much more than usual after the restrictions of the pandemic were lifted.  But, like many other economic predictions, this turned out to be wrong.

    With the wisdom of hindsight, two think tank economists wrote in July that “Chinese households seem even more worried about their jobs and income now than during much of the pandemic. When asked whether they would consume, invest, or save more in the coming weeks, 58 percent of Chinese depositors said they would save more, according to the People’s Bank of China’s depositor survey for the second quarter of 2023.”

    Economic uncertainty also affects the marriage prospects of young adults.

    Among many Chinese, “to be considered as a suitable candidate for marriage, you should be financially stable.  And the more money you have, the better the prospect you become.”  For example, one woman raised in China recently reported that “the first time she introduced her fiancé to her parents… almost immediately, they asked three questions: ‘What does he do for a living, how much does he make, and how much property does he own?’”

    In China, men seeking a spouse can gain an edge by proving their wealth.  Gifts of money are considered both thoughtful and practical.  One man recently gave his Chongqing girlfriend this money bouquet, which consists of 3,344 carefully rolled up bills, with a total value over $45,000.

    Economic barriers to mating have also been increased by the fact that there are too many males and not enough females.  Specifically, there are between 107 and 116 males per 100 females (depending on their age between 15 and 35).  According to Forbes “A variety of factors conspire to produce the imbalance. For one, Chinese parents often prefer sons. The availability of ultrasound makes it easy for parents to detect the gender of a fetus and abort the child that’s not the ‘right’ sex for them.”

    Yikes.  That’s still going on in the 21st century?

    One result of all this is that “Nearly 35 million young men in China will hardly ever find a real date or even have sex in their lives.”

    Double yikes.  Still another reason to be glad I don’t live in China.

    Is the problem of too much saving in China likely to be solved soon?  Nope.

    For decades, the World Bank, the International Monetary Fund and prominent economists have been urging the Chinese government “to do more to support its consumer economy, and to stop relying on growth built on speculative construction of apartment towers and heavy public investment in infrastructure like roads and high-speed rail lines.”

    Specifically, economists recommend changes like this:

    • Make the income tax more progressive and family friendly;
    • Spend more on health care, pensions and education;
    • Spend more on assistance to the poor, which would reduce income inequality.”

    But Xi Jinping has different priorities.  According to Foreign Affairs, Xi “appears much less interested in organizing the economy for growth than his predecessors did. Instead, he is optimizing it for security and resilience.”

    And, if that’s not enough, Xi “has a well-known aversion to any social spending, which… he believes might erode the work ethic of the Chinese people… [In one famous speech], Xi said ‘we must not aim too high or go overboard with social security, and steer clear of the idleness-breeding trap of welfarism.’” 

    Opposition to social spending feels like a very odd position for a Communist leader to take.  Then again, in today’s China, Communism is whatever Xi Jinping says it is.

    China’s economic problems:  How bad are they?

    China’s economy is in trouble.  It was just a few years ago that I wrote a post about how China had “lifted 850 million people out of poverty” with a sizzling growth rate of about 9% for the first two decades of the 21st century.  But these days, the picture is very different.  The official GDP growth target for this year is “around 5.5%,” and many in China are worried the final number will be even lower.

    As the New York Times summed it up a few weeks ago: “Consumers are gloomy. Private investment is sluggish. A big property firm is near collapse. Local governments face crippling debt. Youth unemployment has continued to rise…”  The Washington Post added a list of some immediate results: “Teachers say they’re not getting paid. Motorists say they’re paying more for parking. More and more cities are even auctioning off public services like school lunches, shared bicycles and operating rights for vendor stalls and sightseeing carts.”

    For the last few months, op-ed writers have been elbowing each other out of the way to express conflicting opinions about what this means.  Some fear the consequences, like the Washington Post opinion columnist who predicted that “China’s economic slowdown could cause Xi to pursue more authoritarian and militaristic policies — even an invasion of Taiwan — to contain rising domestic discontent.”  I side with the more optimistic view expressed by Paul Krugman, winner of the 2008 Nobel Memorial Prize in Economic Sciences: “America’s exposure to a potential China crisis is surprisingly small.”

    Today’s economic challenges are a result of the strategy China used to propel its rapid growth:  borrow and build.  When the economy slowed down, the government simply underwrote construction of more airports, more highways, more shopping malls, and more cities.  Not to mention the longest high speed rail system in the world (over 1,400 miles), and more. 

    But they got a little carried away.  The best known examples are China’s “ghost cities,” with “at least 65 million empty homes — enough to house the population of France.”  China also “has enough unused factory capacity to make more than 10 million cars (sufficient to supply the entire Japanese car market—twice).”  At least 100 of their airports “are grossly under-utilized… and many highways are mostly empty of traffic.”

    These apartments were built by Evergrande, one of China’s largest property developers.  When China’s economy declined, Evergrande went bankrupt, and these buildings now sit empty and unfinished, along with many other “ghost cities” throughout China.

    How did they pay for all this?  The same way many people in the US have paid for their remodeled kitchens and exotic vacations:  they borrowed.   According to the International Monetary fund, China’s $47.5 trillion total debt now represents about 250% of GDP, which is similar to the US.  Even more troubling part is the fact that local governments owe $9 trillion in “off-balance sheet debt.” These are “non-performing loans” (a polite term bankers use when borrowers stop making payments).  The solution with Chinese characteristics has been to make banks look more solid, hiding these nearly worthless loans by moving them “to the balance sheets of entities specifically created to absorb non-performing loans.”

    “At the core of China’s current economic trouble is real estate…” according to the New York Times.  “[It] represents a quarter of the country’s economic output and at least three-fifths of household savings.”  But in the last two years “companies accounting for 40 percent of Chinese home sales have defaulted, according to Reuters. As a result, many homes have been left unfinished and suppliers and creditors left unpaid.” That may not mean a lot to the global economy, but it is a matter of financial life and death for many citizens.  As a result, “Protests broke out in more than 100 cities last year as mortgage owners demanded that developers finish the apartments they had already paid for, sometimes years in advance.”

    Demographic trends represent another fault line that threatens China’s future.  According to one Washington Post columnist:  “Last year, the country’s population fell for the first time since 1961… The United Nations projects that the country’s head count will plummet from today’s 1.4 billion to below 800 million by century’s end. You have to go back to the plagues and famines of the late medieval period to find a loss of population so severe.”

    With fewer workers, the economy will grow more slowly.  In addition, the columnist continued, people are living longer, and the number of elderly people represents a growing portion of the population, who will need more government support.  The columnist went on to note that protests have already begun, including “this year’s street protests against medical insurance reforms by tens of thousands of seniors in Wuhan and Dalian.”

    At least part of this demographic predicament was self-induced.  In 1980, China tried to reduce the number of hungry mouths to feed with a strict “one child policy” which was harshly enforced.  By 2016, the harmful effects were so obvious that they finally changed this to a “two child policy,” and in 2021 to a “three child policy.”

    But the damage had been done, especially when it was combined with the fact that China has become “one of the world’s most expensive places to raise a family… [creating] legions of stressed young couples who don’t want to make babies.”

    And that’s not the only stress faced by young adults.  In June, the unemployment rate for this group hit an all-time high of 21%.  In a shocking turn of events, in August “a spokesman of the National Bureau of Statistics of China announced that the publication of age specific unemployment data, including youth unemployment data, would be temporarily suspended.”  The official explanation was that the statistical methodology for analyzing this data needed to be improved.  The unofficial explanation was that the government is lying.  One Peking University professor “estimated that the unemployment rate among youth ages 16 to 24 could be close to 50 percent, more than twice the official figure.” 

    And for those who do find a job, life is not exactly a bed of roses.  Another Washington Post columnist recently wrote that “Young people who do find work are often subject to grueling 72-hour workweeks and burnout. A rash of media stories reports that many 20-somethings are dropping their careers to become ‘full-time children,’ meaning they’re exiting the formal job market and receiving a stipend from their parents to focus on chores and other filial duties… [In response], Chinese leadership has basically told young people to stop whining and ratchet down their expectations. In the words of Xi Jinping, young people must learn to ‘eat bitterness’ (an idiom that roughly means to toughen up by enduring hardship).”

    How did this happen?  According to Axios, “the high unemployment among urban youth is caused in part by a ‘college bubble,’ meaning there are more young people earning college degrees than there are skilled jobs for them to fill.”  Hmm.  Where have I heard that before?

    Another downward economic force is the fact that most Chinese are not consumers by nature.  Rather, the culture favors saving.  As a result Chinese banks have assets of $50 trillion, which equal 300% of its GDP.  This savings rate is four times larger than in the US, where bank assets equal 75% of GDP.  (This is such a fascinating cultural difference that it will be the topic for a separate “five-minute summary” in the next post in this blog.)

    So what does this all mean?  If you live in China, it’s not good.

    Since Mao died in 1976, the Chinese Communist Party has promised its citizens increased prosperity if they just toe the Party line.  But for the next few years or decades, it looks like that deal is no longer on the table.  “Instead,” according to The Guardian, “the government is offering a nationalist, security-based vision of stability, with the economy paying the price if necessary.”

    If you don’t like that deal, according to a recent article in The Atlantic entitled “The China Model is Dead,” the government’s “message to the public is, essentially, ‘suck it up.’”  Or, as Xi himself more diplomatically put it in a recent speech: “We must maintain historic patience and insist on making steady, step-by-step progress.”

    For those of us lucky enough to live outside China, there is little threat that China’s economic problems “will spill over in a major way to the rest of the world [including] the United States.” again according to Paul Krugman.  “Big as China’s economy is, America has remarkably little financial or trade exposure to China’s problems.”

    Some experts, like the Washington Post columnist quoted at the beginning of this post, fear that if things get bad enough, the Chinese government may invade Taiwan to distract people with a wave of patriotic fervor.  Sort of like the plot of the 1997 movie “Wag the Dog.” 

    Fortunately, President Joe Biden is not one of them.  Two weeks ago, at a press conference at the G20 summit meeting, he said that “One upshot of China’s economic downturn [is that]… Beijing is [actually] less likely to invade Taiwan” due to its reduced capacity.

    I sure hope he’s right.