Biden Says China’s Economy Is ‘On the Brink,’ and He Is Right

This photo taken on March 30, 2020 shows employees working on a battery production line at a factory in Huaibei in China's eastern Anhui province. STR/AFP via Getty Images

Commentary

In his May 28 interview with Time magazine, U.S. President Joe Biden said that China’s economy is on the verge of collapse. In addition, President Joe Biden defended U.S. tariffs on Chinese products, stating that the United States would treat China reciprocally. He also criticized the Chinese Communist Party’s (CCP) Belt and Road Initiative (BRI), which has caused numerous problems in participating countries, especially African countries.

China experts who shared their views on a recent “Pinnacle View” episode believe President Biden’s views likely reflect not only his own but also the U.S. government’s perception of China’s current situation.

‘Biden Crossed CCP’s Many Red Lines’

Independent TV producer Li Jun said on “Pinnacle View” that President Biden’s remarks about China in his interview with Time magazine may be the toughest speech by a U.S. president in the last 20 years.

According to Mr. Li, President Biden crossed the Chinese leader’s many red lines.

“First, he said that China’s economy is ‘on the brink.’ Although many economists have made similar assumptions, this is the first time that a U.S. president has said this. Second, Biden said that the Belt and Road Initiative has become ‘a nuisance graveyard initiative.’ Biden refutes the notion that the Belt and Road Initiative has been successful in helping the CCP break through globally and challenge the United States, and questioned, ‘Where are they breaking through? And look what’s happening in Africa.’ What he’s saying is that a lot of the countries involved in the Belt and Road program are in debt, and a lot of the projects are falling apart. Third, Biden also said there is evidence that the CCP is interfering in the U.S. election. Fourth, Biden stated for the fifth time that if the CCP attacks Taiwan, the U.S. may send troops to defend Taiwan. These four points are basically Xi Jinping’s heavily defended red lines, and Biden stepped over all of them at once,” Mr. Li said.

He believes President Biden doesn’t believe any of the economic data coming out of China.

“Last year, Biden began to say that China’s economy was in trouble, and at that time, he mentioned that he had received information about it. This time, the CCP’s reaction to Biden’s remarks was very strong, and the Chinese state media has already begun to counter it by saying, ‘Let’s see who goes down first,’ implying that the CCP believes that the U.S. economy will collapse first,” Mr. Li said.

China’s BRI

According to U.S.-based current affairs commentator Heng He, “The United States, as a major power in maintaining post-war order, must take into account the balance of the whole world. If, under the influence of the BRI, too many countries experience economic collapse or high debt or even mortgage their military bases to China, it will pose a very serious threat to the international interests and global strategy of the United States. The BRI is not just bankrupting one country; it is actually disrupting the balance.”

He sees the BRI as a westward push to sell China’s surplus industries, especially infrastructure like cement and steel, to third-world countries.

“On the surface, it may seem like a good thing to help these countries develop their infrastructure. But in reality, it’s not that these countries want to start a construction project and ask China for help. Instead, it’s the CCP that desperately wants to invest, and the recipient countries are required to use that investment to buy Chinese cement and steel and give construction contracts to Chinese companies. So the whole process is about the CCP exporting [its goods],” Mr. Heng said.

According to Mr. Heng, initially, many countries accepted the investment because they thought there was no harm in accepting the offers. However, after accepting the investment, they soon realized that there were several major problems. The first was that they could not repay the debts they owed; the second was that the facilities they built were not necessarily what they needed most but what the CCP liked to impose on them, which was of no benefit to the country. The third problem is that the CCP’s export of corruption has worsened the politics of many third-world countries.

“The creation of these problems is very unfavorable to the current international order and also very unfavorable to the countries themselves, and it has now been proven that many of them are basically bankrupt,” Mr. Heng said.

He believes that President Biden announced tariffs on Chinese electric cars as a precautionary measure. As Europe considers raising tariffs on Chinese electric cars to protect its own industry, the United States, as an ally, must show solidarity. Moreover, if Europe raises taxes, China will redirect its electric vehicle exports to the United States through various means, such as building factories in Mexico or the United States or lowering prices, so the United States must be prepared to protect its industry and interests.

Overproduction and Possible War Preparation

In his interview with Time magazine, Present Biden said, “Name me—would you trade places with Xi Jinping and any other country?”

Guo Jun, president of the Hong Kong edition of The Epoch Times, found this statement very interesting.

“Biden was saying that no one wants to switch identities with Xi Jinping. What he means is that China is in a lot of trouble, mainly because the economic crisis is almost insurmountable, and as a leader, he is under tremendous personal pressure. Of course, this is also a problem of the political system. Under the Western system of separation of powers, many people share the responsibility for the country and, therefore, share the pressure. An autocratic system is a monopoly of power, which is really a monopoly of responsibility. In Chinese history, there are many stories about the emperor saying on his deathbed at the time of social upheaval and the collapse of the country that he hoped not to be an emperor in his next life and that he hoped to be born into an ordinary family instead of an imperial family. When society is relatively normal and stable, the power of the emperor seems to be a good thing. But when the situation is chaotic, being an emperor is actually a very dangerous job. I think what Biden means is that the current situation in China is very bad,” Ms. Guo said.

She believes that the main problems facing the Chinese economy are overproduction and insufficient domestic demand. Despite this, the government continues to subsidize producers and enterprises, exacerbating the imbalance. The economy functions like a cyclical system, similar to the human body’s circulatory system: production must be balanced by consumption to maintain capital flow. U.S. Treasury Secretary Janet Yellen, during her visit to China, recommended increasing residents’ incomes to boost domestic demand. Many Chinese economists have also suggested subsidizing consumers rather than enterprises to stimulate consumption. However, Beijing authorities continue to focus on enterprise subsidies.

A typical example is the shopping platform Temu. The Chinese-made goods sold on the platform are unbelievably cheap, and according to some published data, the sellers are operating at a loss. The production frenzy in China and its dumping in other countries have scared many countries, Ms. Guo continued.

“The most obvious economic problem in China is the imbalance of the whole economy. However, the CCP’s solution to its economic problem is to further increase this imbalance and increase production, so many people think that the CCP is preparing for possible shortages in the future, an indication that it might be preparing for a war in the future. This should be the greatest worry of the international community,” Ms. Guo said.

Mr. Heng agrees with this analysis.

“We expect to see this trend more clearly in the future. That is, China’s economy will move toward a more planned economy (also known as a command economy) and a more supply-side system. In fact, China’s economy has been moving in this direction for quite some time, and the structural setting of the CCP regime is also moving in this direction. There are two possibilities. One possibility is that Xi Jinping himself and some of the CCP elders believe that Deng Xiaoping’s economic reforms are not sustainable at this stage and that they are more inclined toward a planned economy. Another possibility is a shift to a wartime system. The ‘symptoms’ of these two are, in fact, the same, but the motives are not exactly the same. We don’t really know what the motivation is, but it is generally believed that in the event of war, the CCP’s planned economy is more capable of coping with a state of war,” according to Mr. Heng.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.