Happy New Year to JAPAN Forward readers. We are pleased to bring you "Predictions 2024," a special New Year's series sharing the foresight and expectations of selected contributors for the coming year in their fields of specialty, continuing with Jennifer Zeng, our contributing China analyst.
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Some Chinese netizens say that if they were to summarize China in 2023 with a single Chinese character, it would be "烂" (rotten). Others suggest "崩" (collapse) or "跌" (fall). However, the official annual character chosen was "振" (revive), symbolizing revitalization and upliftment. So, what Chinese character might we predict for China in 2024?
In 1997, Gordon Chang, an expert on Chinese issues, wrote a book titled "The Coming Collapse of China." In it, he predicted that China would collapse by 2011. However, 2011 came and went without such a collapse.
In 2017, Chinese scholars He Qinglian and Cheng Xiaonong co-authored "China: Crumbling But Not Collapsing (《中國：潰而不崩》)." They predicted that China would maintain a state of "crumbling but not collapsing" over the next 10-20 years. According to their forecast, China is still in this era of "crumbling but not collapsing."
Perhaps even the most astute scholars cannot precisely predict the future. However, when cancer cells have spread to the skin's surface to the extent that they are "visible to the naked eye," even a person with no medical knowledge can conclude that the patient's end is near.
The Chinese Communist regime and society are exactly at this stage currently.
Xi Sweeping His Path
Over the past 40-plus years, China has indeed experienced astonishing economic growth. As a result, people have gradually come to see the Chinese Communist Party (CCP) as a formidable force.
However, in 2023, the accumulation of long-standing problems has finally surfaced. They are becoming "visible to the naked eye."
Politically, Xi Jinping took a decade to consolidate power, successfully breaking term limits to enter a "lifetime rule" mode. He has now eliminated all other factions within the party to become the sole authority.
Unexpectedly, after eliminating all other factions, Xi started targeting his own appointees. This led to unprecedented events in Chinese politics: the sudden and unexplained disappearance of the ministers of the two most important government departments, Foreign Affairs and Defense. With only five State Councilors, two positions remain unfilled to this date. The scale of purges in the military is also unprecedented, with over 70 high-ranking officials in the Rocket Force alone being purged.
Troubles in Diplomacy and the Economy
Economically, the end of three years of severe lockdowns has not brought the so-called "revenge rebound." Instead, bad news keeps emerging from the real estate market, banking sector, local government debts, and the stock market.
Supply chains, and foreign and even domestic capital are steadily withdrawing from China. For the general public, and especially the youths, "downgrading consumption," relying on parents, "lying flat," not getting married, not buying houses or cars, and not having children have become new trends.
Diplomatically, various international alliances against the CCP are forming one after another. Sino-American diplomacy, once considered a "ballast stone" by the CCP, has not been able to return to its former state since the "spy balloon" incident earlier in 2023.
What's most alarming is that Xi Jinping's reckless actions in various fields have finally made almost everyone realize: If China continues like this, there's no hope left…
At the end of 2023, what the Chinese society faces is exactly such a catastrophic situation.
So, What Will Happen in 2024?
Politically, the most uncertain factor is whether the massive purges Xi Jinping has carried out in the military and within the CCP will eventually trigger internal rebellion. Will Xi Jinping, who fears assassination most, actually face an unexpected fate? This could be the biggest black swan event that Chinese society might face.
Economically, it's almost certain that the real estate market will experience an even more severe downturn in 2024. The collapses in 2023 were mainly insolvent real estate companies and some financial products managed by these companies. However, housing prices haven't fallen sharply. Or, in other words, housing prices in so-called first-tier cities such as Beijing and Shanghai somehow managed to hold up until the end of the year before starting to decline.
However, in 2024 a potential collapse in housing prices could impact nearly all homeowners. Given that 70% of Chinese household assets are tied to the real estate market, a drop in housing prices means a shrinkage in personal assets. Banks will force loan holders to pay more margin, and many will have to give up on continuing mortgage payments, expanding the crisis to the banking sector.
A local government fiscal crisis is also almost certain to occur. If the central government deals with the crisis by printing money, it would trigger severe inflation. Yet if it allows local governments to go bankrupt, the ensuing social unrest is hard to imagine.
Epidemics and Unemployment
Another foreseeable outcome is widespread unemployment. As I've calculated in a recent article based on official data, a 10% economic downturn could leave up to 126 million people unemployed. And the government will likely have no relief measures.
The development and worsening of the epidemic is another highly likely event. Since the new wave began in September 2023, it has caused widespread outbreaks in China. Some children's hospitals have seen patient numbers ten times the usual. In some areas, people report that crematoriums are again overwhelmed. This is reminiscent of the way they were at the end of 2022 and early 2023 when lockdowns were suddenly lifted.
However, due to the CCP's usual cover-up tactics, most people are unaware of the real virus transmission situation. Therefore, they cannot take proper precautions. Coupled with the poor quality of vaccines, the epidemic getting out of control again is a very likely scenario.
How Far Will Xi Take the Military?
Militarily, 2024 was originally intended to be a crucial window for the CCP's so-called "reunification with Taiwan." Taiwan's election results will determine the CCP's reunification approach. That is, whether to use force or achieve it without fighting.
If they choose to use force, the social turmoil and division that may occur after the United States elections could be the CCP's crucial window. That would mean a reduced political will in the US to intervene in external affairs.
However, rapid economic decline, top secret information leaks, huge purges in the Rocket Force, loyalty issues in the military, and reluctance to fight may force Xi Jinping to postpone an attack on Taiwan.
On the other hand, the social unrest and massive unemployment caused by economic downturns may push Xi Jinping to urgently wage war to divert domestic crises and resolve financial, political, and social crises using a state of emergency brought on by war.
Therefore, he might choose to start a small-scale and more controllable war in the South China Sea. Or in the Senkaku Islands area, where there are territorial disputes with Japan. When there's no other way to resolve crises, war might be the only option. Especially since Xi Jinping indeed has the grand ambition of "reunifying Taiwan" during his term and reshaping the world map alongside Vladimir Putin.
'Crumbling Without Collapsing'
In short, in 2024, China will undoubtedly face a larger scale of various collapses or deteriorations. How the public will respond to survival difficulties or even crises, whether they will continue to endure indefinitely or rise up in some form of resistance, remains unknown.
While some believe China's "crumbling without collapsing" state will persist for many years, others think that a "brittle fracture" or an avalanche-like sudden collapse in such a massive system is always possible.
That is to say, as an ancient Chinese saying goes, even if the CCP avoids the crises on the first day of the month, the inevitable will still come on the fifth day. (躲過初一，躲不過十五）
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- Read other predictions from our series, Predictions 2024.
Author: Jennifer Zeng
Find articles by Jennifer Zeng on JAPAN Forward. Follow her on X (formerly Twitter) and on her blog page, Jennifer's World.
