China’s economy is in serious trouble. Paramount leader Xi Jinping’s turn toward Chinese Communist Party control is finally ending the People’s Republic of China’s experiment with state-directed capitalism.
China has cut off the outside world from its economic data, but its youth unemployment rate and local government debt problems are growing to unsustainable proportions. And its real estate market is a mess. China also is entering into a deflationary period and has even cut the salaries of mid-level government officials.
As a result, the longstanding agreement between the CCP and the Chinese people — economic growth in exchange for political repression — is null and void.
This presents Xi with a conundrum. He can relax controls to improve the economy, but that would mean admitting error and losing face. Worse, if the economy doesn’t improve, Xi’s reign will be seen as a failure.
But there’s a way out, one common to dictators: start a war to stoke nationalist fervor.
This option is often overlooked by Western observers, who feel comfortable in their mirror-imaging fallacies. Under this bias, they assume that foreign regimes act with the same rationale as the nations where they have lived, studied, vacationed, or worked.
In 1982, when a worldwide recession was hitting developing nations harder than the U.S., the Argentinian junta was running low on popularity. Then, on April 2, Argentina’s military leaders made the rash decision to invade Islas las Malvinas — known in most of the world as the Falkland Islands, a British territory.
