China has a huge problem on their hands.
They thought they could overtake the U.S. and spread communism worldwide.
But now Xi Jinping’s plan to dominate the world is falling apart.
For years, many pundits have been predicting that the “Rise of China” will lead to the Chinese Communist Party overtaking the United States and spreading their ideology around the globe.
It certainly looked that way as their economy grew exponentially and became leaders in a number of industries.
But authoritarianism always fails. And now China’s rise is being interrupted by some major mistakes that they’ve made along the way.
According to the Wall Street Journal, “China has spent a trillion dollars to expand its influence across Asia, Africa and Latin America through its Belt and Road infrastructure program. Now, Beijing is working on an overhaul of the troubled initiative, according to people involved in policy-making.”
“A slowing global economy, combined with rising interest rates and higher inflation, have left countries struggling to repay their debts to China. Tens of billions of dollars of loans have gone sour, and numerous development projects have stalled. Western leaders have criticized China’s lending practices, which some have labeled ‘debt-trap diplomacy,’ embarrassing Beijing. Many economists and investors have said the country’s lending practices have contributed to debt crises in places like Sri Lanka and Zambia.”
So, China’s attempts to pretend like they are “helping” underdeveloped countries – with the underhanded goal of buying their loyalty to Beijing – are actually backfiring and leaving these nations worse off than they were before.
Now China is having to scale back the entire program because of its massive failures.
The article continues, “After nearly a decade of pressing Chinese banks to be generous with loans, Chinese policy makers are discussing a more conservative program, dubbed Belt and Road 2.0 in internal discussions, that would more rigorously evaluate new projects for financing, the people involved said. They have also become open to accepting some losses on loans and renegotiating debt, something they had been previously unwilling to do.”
Chinese businesses, which have been the jet fuel for the soaring Chinese economy in the last few decades, are not going to be happy about this.
Reportedly the Chinese Communist Party is going to force them to lose money on this initiative, stunting the growth of the economy.
According to the article, “The process could force Chinese banks to accept losses, something they’ve long opposed. For years, Beijing preferred to extend the maturity of troubled loans, a practice known in the finance industry as ‘extend and pretend.’”
“That strategy risks prolonging countries’ debt woes rather than fixing them.”
China is in big trouble. They are facing real estate problems and a population crisis. And they have an authoritarian system of government where the people in power rarely have their assumptions questioned or get challenged on anything.
It’s a reminder to those in America who would prefer to see a strongman leader that a system of government like that is always doomed to fail.