China is mired in serious economic troubles, which puts Taiwan at more risk of being invaded this year than any year in the past, according to hedge fund manager and investor Kyle Bass.
Low birth rates, banking and real estate crises, local government debts, and youth unemployment are problems facing Chinese Communist Party (CCP) leader Xi Jinping, Mr. Bass said.
“So you’ve got the perfect economic storm hitting China at a point in time in which the geopolitical tensions in the world are at, call it a multi-decade high,” he added.
The U.S.–China relations remain fraught with challenges, with intensifying military rivalry and trade disputes. Two incidents in 2023—the Chinese spy balloon and China’s spy base in Cuba—have further raised concerns in the United States about threats posed by the Chinese regime. The bilateral ties could be further tested in the coming months over Taiwan after the self-ruled island holds its presidential and parliamentary elections on Jan. 13.
“Some enterprises had a tough time. Some people had difficulty finding jobs and meeting basic needs,” Xi said in his address.
The CCP leader also reiterated his intention to take over Taiwan, saying the two sides “will surely be reunified” and “all Chinese on both sides of the Taiwan Strait should be bound by a common sense of purpose and share in the glory of the rejuvenation of the Chinese nation.”
“I think post-election of Taiwan, all bets are off as to what Xi Jinping is going to do,” Mr. Bass said.
“And so I think that you’re going to see … a number of restructurings. I think you’re going to see even more economic pain. I think you’re going to see Xi Jinping try to change the narrative to stay in power,” he continued.
Taiwan
Since December, Taiwan’s defense ministry has reported more than 20 Chinese balloons crossing the median line separating Taiwan from China, with some passing directly over the island.“That is an effort to engage in psychological warfare, also to invade directly Taiwan’s airspace, and to monitor Taiwan’s level of readiness at their military bases. So going into the election, China has increased its belligerence,” Mr. Bass said.
“If the KMT candidate wins, I think that gives China a little bit more breathing room to engage in a soft takeover instead of a hard takeover,” Mr. Bass said.
“We'll see what happens there. But I still think the DPP candidate will run away with this election.”
Mr. Bass pondered what course of action the West would take if the Chinese regime invaded Taiwan.
“You’ve heard Japan say publicly—that they will immediately be in the fight on Taiwan’s side. Well, that has global implications if Japan is not bluffing,” Mr. Bass said.
He suggested that one of the penalties against the CCP could be pulling China out of the SWIFT international payments system.
“When you think about what we did with Russia, those sanctions were not really effective. We sanction 10 percent of the oligarchs, big deal. You know, we left all the Russian banks on the SWIFT system,” he said.
“We let the blood continue to flow to the tumor in Russia because we were afraid of having gasoline prices too high,” he continued.
“We have an administration that is … they’re not able to press the hard button. They can only press an easy button. Well, the hard button might get pressed for us in that invasion, and we'll see what happens.”
