China Flowers

In the post-Cold War world, we saw a brief period where the U.S. was called the lone superpower. Soon enough, though, the old familiar triad of dominance on the world geopolitical stage reappeared: the U.S.A., China, and Russia - the Soviet proxy, seemingly playing third base this time while China comes into its own.

Looming large as our greatest adversary right now, China merits some attention being paid to its being. A country grounded in Communism, whose basis is antithetical to our socioeconomic system, has seen rapid development in recent decades, portending serious competition if not a threat. Tensions are acute at present, with President Trump’s attempts to rectify the United States’ asymmetric trade balance with China bringing into question just what kind of threat it represents.

Currently, it has the world's second-largest economy while being the world’s largest exporter, a rapidly expanding military that hopes to soon have a blue water navy, a huge manufacturing capability, a burgeoning space program, a firm foothold in the digital economy, some diplomatic success building relationships around the world with the Belt and Road Initiative (BRI), and there’s a putative population of 1.4 billion available low-income workers.

China has become an upper-middle-income country, although as recently as 2020, 17% of the population lived below the poverty line. Its remarkable growth since economic reform in 1978 has been driven by export-oriented manufacturing that may have reached its limits. Many recent reports indicate that China’s internal economy has significant problems. Foreign firms, such as Microsoft, IBM, Dell, Black & Decker, Airbnb, etc., are reducing operations or just plain leaving. Some reasons include Xi Jinping's effort, begun in 2023, to reduce Western cultural influence, global supply chain concerns and concentration risks. The current tariff imbroglio is likely a factor, as well. China has also received much criticism for its labor practices.

Investment opportunities for the general population consist almost exclusively of buying real estate leases, and the residential real estate market has collapsed, beginning with the bankruptcy of the Evergrande Group last year. Many Chinese hold finance agreements for apartments that are, and will remain, unfinished. The Chinese construction industry has an ongoing problem with what they call “Tofu Dreg,” or seriously substandard building practices resulting in safety hazards and many unfinished and unoccupied or unoccupiable buildings.

Tofu Dreg is another symptom of what may also be contributing to the business slowdown: the widespread and endemic corruption that’s a feature of contemporary China. That corruption seems a perennial characteristic of the highly centralized CCP government.

China’s BRI has been presented as plausibly increasing global GDP by ~$7 trillion while reducing global trade costs by 2.2 percent by 2040, through its overall infrastructure enhancement. Meanwhile, much-needed financing for developing countries is also an integral part. This endeavor paints the CCP as a contributing world citizen in much the same way the U.S. Navy’s continued exercise of navigation through international waters has kept maritime trade possible for all nations.

From one source, “Countries join by signing a Memorandum of Understanding (MOU) with China on cooperation under the BRI framework. These MOUs create few or no obligations for the states who sign them but increase the possibility of reaping future economic benefits.” Another source contradicts, "BRI has added to some participating countries’ debt levels to an unsustainable extent. BRI projects are tied to Chinese contractors and conducted through a largely closed bidding process, excluding firms from the United States and many other countries. Because Chinese workers do most of the construction and then operate the newly built facilities, the transfer of know-how and training of local workers is limited." The reality of BRI is that some countries are overwhelmed by the debt, and China then has a thumb-on-the-scale opportunity to negotiate for long-term access and/or military bases.

Also, of course, Tofu Dreg is an inherent part of BRI. Just last month, a 33-story skyscraper China was building in Bangkok collapsed during an earthquake (the only building to do so), killing at least 47. If a Chinese contractor isn’t going to build it well in China, why expect it to be done differently in Thailand?

While the U.S. and China have an unsettled trade relationship, it bears remembering that China is unpopular with several countries for its asymmetric tariff relationships with many and its expanded claims in the South China Sea and the concomitant aggressive intercepts of U.S. and others’ vessels and aircraft. A U.S. DoD official has said that China is the only competitor with the intent, will and capability to reshape the international order. To that end, they are acquiring a blue water carrier-based navy.

In the digital marketplace, China is well represented at the retail level, with Alibaba, Temu, Shein (may be closing), and many distributors on Amazon. On the tech side, they manufacture many lower-level tech devices and have some market leaders, such as DJI. The U.S. government and allies have instituted controls on the export of semiconductor tech and tools, spurring China to attempt to develop its own semiconductor industry, as they presently can’t (yet) produce the most advanced chips. Deepseek made a splash several weeks ago when it debuted as, per hype, a quantum leap in AI efficiency. We’ll see how that shakes out in the AI sphere, but I can’t help but wonder how well that AI can free associate under the proscriptions mandated by the Communist Chinese dictatorship.

And then there are those 1.4 billion Chinese. Or are there? A couple of weeks ago, this popped up on YouTube: China's population is just a fraction of 1.4 billion. The presenter attempts to make her case that China’s actual population is 300-400 million, or about a billion less than the world thinks. She begins by looking at what she believes was the pre-pandemic population, based on Russian estimates, and a comparison with India’s population. Also cited the Great Famine (1959-1961), deaths from the Cultural Revolution, followed by the one child policy and China’s table salt consumption. She arrives at a pre-pandemic population of 695 to 800 million. Then her estimates of the pandemic death toll lead her to say the current population is 300-400 million.

Whew! I find it difficult to believe that there are one billion fewer people on the planet than almost everyone outside of China believes. ChinaDaily.com.cn posted recently that China’s civil aviation sector made a record number of 730 million passenger air trips in 2024. For comparison, I used the number of TSA screenings for 2024. For our nation of ~340 million there were 904 million screenings in 2024, which I'm calling equivalent to passenger air trips. Now it may not be a legitimate population measure because the two nations are not socioeconomically similar. Nevertheless, China with a putative population of 1.4 billion people recorded only about 80% of the air travel of the U.S. whose population is nominally a fourth of China's.

Unquestionably, China is the primary competitor to the U.S. on the world stage at present, but it is difficult for those of us not in a position to access government intelligence sources to get a firm handle on just what we face in China.