With an economy in crisis, the chances of attacking Taiwan increase

The economic outlook is not rosy for Beijing and Xi could turn to nationalism as a new social glue. The new leadership lacks “economic brains” like outgoing Premier Li Keqiang. The military leadership appointed by the Chinese president knows the Taiwan issue well.

Beijing () – With Xi Jinping more than ever absolute leader, the guarantee of economic well-being could cease to be the social glue between the regime and the population. Surrounded by loyalists with little economic experience, the Chinese president and general secretary of the Chinese Communist Party (CCP) could play the nationalist card to perpetuate himself in power. Translated: A constantly slowing Chinese economy increases the chances of an attack on Taiwan.

The new Politburo Standing Committee emerged from the 20th Party Congress – which concluded on October 22 – is composed only of Xi loyalists. Premier Li Keqiang’s departure from the political stage, outgoing member Wang Yang’s exclusion, and Vice Premier Hu Chunhua’s non-promotion leave China’s real decision-making body without “economic brains.”

In the third quarter of the year, the Chinese GDP grew more than expected: 3.9% compared to the 3.4% predicted by a Reuters study. The data published today, however, cast doubt on future prospects: exports are growing, but weakly; retail sales fell in September from August; real estate prices continue to decline; youth unemployment remains high, around 18%.

Fearing new pressure on the private sector to the benefit of large public companies, markets reacted poorly to Xi’s third coronation and the absence of reformist figures on the Politburo Standing Committee. The Hong Kong Stock Exchange posted a loss of more than 6%; Shanghai and Shenzhen lose more than 2%.

Most importantly for investors, Xi shows no signs of easing even a bit from his draconian policy of zeroing out covid-19, which is seen as an obstacle to economic recovery. According to Nomura, as of last week, various forms of lockdowns and health checks were in place in 30 Chinese cities, measures affecting an estimated 225 million people.

Analysts point out that Xi has placed at the head of the new Central Military Commission – which he himself chairs – figures who know the Taiwan issue well. In Taipei, they expect greater pressure from Beijing, also taking into account that a section against Taiwan independence has been included in the PCCh’s statute. According to Admiral Michael Gilday, chief of naval operations for the US Navy, China could invade the island in 2024 and not 2027, as the Pentagon had predicted.