China Power | Economy | East Asia

The 6 Horsemen of the Apocalypse for China

The struggles of 2022 highlighted six crises China will have to face now and into the future.

The 6 Horsemen of the Apocalypse for China
Credit: Depositphotos

2022 was not an easy year for China. Outbreaks of COVID-19 and the subsequent strict control measures that induced protests nationwide, as well as the geopolitical challenges that the country faces, are all but outward signs of the crises that the country will encounter soon, or is currently undergoing.

All in all, there are six such major crises, which we can call the “Six Horsemen of the Apocalypse” for China. These problems are not unknown to those who have even a glimpse of the actual situation of the country, though they have not always attracted the attention that they should.

First of all, China is one of the countries facing a serious demographic problem in the form of an aging population. The disastrous effect of this is clearly seen in the current pandemic. There are countless discussions and reports about the spread of COVID-19 in the country, many of which are sensational. However, as China’s population grows older and older, even other common diseases, such as the influenza virus, could have an equally disastrous result – or even worse. The elderly have worse survival rates from such illnesses, so an older population will mean more deaths. China’s pandemic crisis is thus actually a manifestation of its aging crisis, seen in the depletion of public medical resources, and even of social resources, including funeral preparations.

The second of these Horsemen would be a food crisis, which has a lot to do with how the land has been used in China. During the period when real estate was booming at the end of the 20th century, land became a resource for profit, and less and less of it was used in the agricultural sector. Given the country’s huge population, without enough land for growing food, the matter of feeding its people becomes irresolvable for China. At first, China managed by simply importing food from other countries, but the problems kept snowballing. With the eruption of the Russia-Ukraine war, securing China’s food supply has become a prominent issue. After all, China depends heavily on wheat, sunflower oils, fertilizers, maize, barley, and other food products from Ukraine and Russia for domestic consumption and food production.

China is also in a state of crisis regarding debt. With problems constantly emerging and property constantly depreciating, the debt situation already appears to be in a state of crisis, and it will only get worse in the future. Under such circumstances, other countries could resort to financial macro-control capabilities, such as raising interest rates, but it would be hard for China to do so. Because China has a huge amount of household debts, raising interest rates will cause serious social turmoil, as evidenced by the collective refusal by home buyers to pay their mortgage loans in 2022. Such a situation means that China’s financial crisis has deepened to the point where the People’s Bank of China has substantially lost the ability to regulate monetary policies by raising interest rates.

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The fourth Horseman is the geopolitical crisis that China is facing. For a long time, China seemed to really believe that its rise had nothing to do with global geopolitics, and that what it achieved depended entirely on the hardworking Chinese themselves. However, the ongoing war in Ukraine has opened a window for China to see the complexity of geopolitics. Hence, like it or not China has to face the onslaught of the marching wheel of geopolitics.

The next Horseman is the supply chain crisis, a result of the era of globalization. China profoundly engages in globalization and is the biggest beneficiary of it, but Beijing has neither the ability nor the willingness to do more to maintain the globalization process as it comes under increasing pressure. China’s ambiguous attitude toward such major events as the war in Ukraine, which seriously shattered globalization, has naturally further boosted de-globalization. In the huge transformation from globalization to de-globalization, supply chains of all sectors in the world will inevitably be restructured, reorganized, and refashioned. This will involve a lot of capital, as well as a huge number of bankruptcies and debts.

The supply chain crisis is already having an acute impact on China. For example, China faces sanctions and restrictions in the semiconductor sector, and this is not entirely due to geopolitical factors. It is also a byproduct of supply chain restructuring in various countries seeking to build self-owned, trusted, and risk-resilient supply chains. This is precisely why the United States will do everything possible to bring TSMC to the country for production.

The final Horseman facing China is the urbanization crisis. Considering all the crises related to China’s economy and society, many of them are self-inflicted because the root cause is the abnormal development of China’s urbanization. China is a country with an extreme dichotomy between urban and rural areas. Before urbanization, the urban population was less than 100 million, and the remaining nearly 700 million lived in rural areas. Now China’s population has reached 1.4 billion, with over 880 million of them living in cities. That means hundreds of millions of rural people have pushed (or been pushed) into cities.

As a byproduct of this rapid change, cities have in one sense remained villages, with village-style management imposed on urban administration. This means that the governance style has become more direct, simplified, and even coarse.

What’s more serious is that urbanization always requires a large amount of land for real estate. When real estate is thriving, it will destroy other industries and create an economic crisis. Therefore, China’s economic crisis is just a superficial reflection of the more deep-seated crisis of urbanization. Urbanization, after driving the Chinese economy’s golden decade, can also lead to a decade or more of economic stagnation.

Failure to grasp the reality of these crises would hamper the Chinese authorities’ governance, mitigation, adjustment, and means to address the problems. The final outcome would be nothing short of unspeakable social tragedies. For instance, the crisis seen in public medical resources today, though driven by the COVID-19 outbreaks, is in fact a manifestation of the aging crisis at its core.

In the future, these Six Horsemen of Apocalypse would surely make their appearance, unleashing shock waves that will be transmitted to the deeper level of society, causing more and more realistic problems and conflicts.