Chinese syndrome

(To Gino Lanzara)
17/07/18

In the last year, also given the profound institutional changes, the general attention was focused on resurgent Chinese capabilities, both from an economic - institutional and from a geopolitical point of view, concerning the attempt of a more and more decisive hegemonic affirmation. What was missed, however, was the presence of a valid opposer to the "cause of beatification"Of the political course issued by Xi Jinping; in view of the overview provided, there are in fact aspects that can not be neglected, and which have a specific weight that is not irrelevant.

The Chinese economic growth rests its foundations on a debt that, the central governor Zhou Xiaochuan, has defined as very close to a Minsky moment, from the name of the American economist, Cassandra in his time unheard of the crisis of the subprime. The Chinese public debt, equal to approximately 4.600 billion dollars, must be multiplied by 2,5 due to the debts contracted by companies at the peripheral and municipal level; in summary, according to estimates by Moody's and Standard & Poor's, and despite the 2015 devaluation maneuvers of the yuan (or renminbi), the excessively high levels of debt continue to pose serious stability risks for the financial system, also endangered by needs of a middle class capable of rapidly increasing consumer credit: more than one potential bubble.

The Chinese economy therefore grows, but paradoxically it risks collapse, unless it is able to direct it towards "a more resilient and inclusive model", as pointed out by the OECD, which has not failed to stigmatize two aspects: the first connected to the the fact that there is no mechanism capable of declaring bankruptcy to large state companies; the second linked to the maturity of bonds issued by local authorities, and which are potential clockwork systems capable of causing default.

In light of the strategic targets set, Xi has therefore had to set new priorities, summarized in the slogan "quality first, stability first", For which a GDP was established at 6,5% instead of 6,9%, going in sharp contrast with the objective of"as high as possible", A harbinger of an unbalanced economy because it is based mainly on investments and exports. While not being able to speak of austerity, China must slow down the trend of liabilities by lowering its deficit, all while continuing to invest and, above all, by defusing the risk factors for economic stability capable of undermining Xi's authority.

Even environmental risks, from an eminently economic point of view, are important; the closure of the old and inefficient heavy industrial structures will lead to strong unemployment in traditionally poor areas and activities that are difficult to reconceivate, which, even now, are signs of strong social inequalities. The resource that China continues to have the greatest need is still the oil whose transport, given its geographical characteristics, is of strategic importance. Its price, not always determined by the mechanism of supply and demand, still appears to be the best possible system to regulate both potential conflicts and power relations, according to an axis that adjusts the interests of the major powers and Saudi Arabia by putting in difficulty the 'Iran. As in all the lucrative activities, the producing countries, however, need liquidity that China, hit by the war of American duties, now has difficulty in ensuring as previously because it is committed, in the long term, to realize an internal market able to compensate for the one in distress of exports. The attempt to mitigate the effects of tariffs therefore leads even more the Dragon to have to implement, according to a sort of Keynesian paradigm, infrastructural programs such as the BRI (Belt and Road Initiative, ed), capable of upsetting social and environmental balances that arise which target, among others, the obsolescence of the Suez Canal.

But what are, after all, the true objectives of Beijing, for which we have come to the definition of a capitalist state system so atypical? The idea advocated of a sort of shared prosperity according to the model win-win, it convinces less and less, and the BIS begins to be perceived as a strategic artifice able to convey political interference and financial dependencies. The commercial agreements entered into by China at the beginning of 2018 have led to further expansion in port infrastructure investments that show both the features of a dual use civil and military, and the frequent involvement of countries with level ratings junk and / or with not particularly advanced legal and commercial cultures. Therefore, one can not deny the risk of increasing the strategic depth and the projective capacities of Chinese power according to directions far from the borders of the mother country. Indicative Liaison Sino-British, aimed at compensating for the difficulties of the Brexit, and to create a further European bridgehead able to make China as an economic bulwark of the United Kingdom until it reaches the Chinese interests on the Atlantic, the US Ocean . But let us not forget the second factor of the binomial economy - power, or the military instrument.

The US, conscious of both the current shortage of a Chinese domestic market and Beijing's contingent impossibility to control the oceans, consider the BIS a system capable of concealing a temporary inadequacy. Already at the end of the '80 years Andrew Marshall, head of the Pentagon's Office of Net Assessment, identified in China the adversary who would succeed the USSR, and invited the administrations in charge to attack the structural deficiencies of the Middle Empire. ; while Europe celebrated an unlikely American decline, President Obama inaugurated his own pivot to Asia which highlighted technological gap and Sea Power still consistent and certainly not scalable from the Silk Roads.

To impose its superiority, the Americans will therefore still be able to use the deterrent power of the US Navy, favoring on the one hand the military resurgence of the Asian countries under their protective umbrella, and on the other hand taking care that no revanchist aspirations are asserted, such as in Japan or Vietnam. Only an effective Chinese naval rearmament could call into question the control of the Straits and of mercantile traffic; if it is true that China is setting up new and more powerful UU.NN. in house, it is however equally true that the actual capacity Combat Ready it can only be acquired with time, and provided you avoid dangerous close contacts. The current battlefield is therefore the technological one. The current dispute over intellectual property enhances two particularly relevant aspects: the political and the economic-commercial. Politically, the United States, internally diversified, must compete with a more centralized and authoritarian China than in the past, with a president of fact for life, and above all able to draw on sovereign funds. The Chinese technological acquisitions, therefore not being able to be considered as simple foreign direct investments, therefore rise to issues concerning national security.

The danger is not so random, especially considering the fact that, in the Chinese strategic thought, the principle of fusion between the civil and military sectors is present: the junmin ronghe, still and always a pervasive form of dual use, which nourishes the declared objective of creating forms of synergistic interdependence between the various productive sectors and which allows a global economic expansion that pursues activities of a strategic - economic nature. The commercial war declared by the Trump Administration, after all, is an accusation of Western ingenuity, if it is true that, thanks to the acquisitions made, China can aspire to become, within the 2025, a leader of thehi-tech. The scenario is therefore much more complex and difficult to interpret than it seems. While the current financial fragility in China requires a change of course, the state investment policy can not and must not stop, it is evident that it is of obvious interest for the landings of Vanuatu, Republic of the South Pacific, which would further expand plus the string of pearls of the Dragon, but still without a truly effective ocean fleet.

On the other side the consolidated US thalassocracy, with an administration behind it, even if not very diplomatically, nevertheless manages to identify and make the most risky fault points evident.

That China is launching a challenge to the world is evident; that the non-American West is ready to pick it up, much less.

(photo: Ministry of National Defense of the People's Republic of China / gov.cn / US Navy)