The long-awaited debt crisis in China has finally arrived. The news has recently reported on debt collection cases involving the “Evergrande Real Estate” firm, a Chinese real estate behemoth, prompting victims to fight for their rights in several locations.

Chinese real estate enterprises frequently employ high leverage. For example, three or four years ago, Evergrande got into financial difficulties. However, they chose to take on debt to increase debt. Furthermore, they forcefully market “financial management products” for their employees through its subsidiary “Heng Ta Tai Fu” to bridge the financial vacuum.

As a result, the debt has been continuously mounting. Evergrande’s debt was over $305 billion (1,970 billion yuan) last year and has subsequently climbed to $371 billion (2,400 billion yuan).

Evergrande’s debt issues have been well-publicized for some time. However, the Chinese Communist Party (CCP) declined to intervene, resulting in Evergrande’s insolvency.

China’s annual national income is $15.6 trillion (101 trillion yuan), and the central government’s annual income is $2,8 trillion (18 trillion yuan). Therefore, spending up to $371 billion (2,400 billion yuan) to save Evergrande is a significant financial burden.

The CCP now has to think about how to deal with the fallout. The CCP is especially concerned that this occurrence may provoke “social instability” by affecting people’s hearts. Naturally, the safety and well-being of Evergrande’s 200,000 employees will take precedence. In the Evergrande-related industries, however, there are a total of 3.8 million workers. They’ll have to cope with unemployment as well, so this appears to be a difficult situation. The debt problem, on the other hand, can be resolved using market mechanisms.

Worse, Evergrande is far from being a lone “gray rhino.” (The term “gray rhino” refers to the challenges that a country’s economy faces but typically overlooks.) More real estate corporations will follow suit following the storm. As a result, the Chinese economy will undoubtedly suffer greatly.

Real estate bubble burst, China faces economic crisis

China’s economy has relied on “a trade surplus that produces a lot of foreign cash” and “real estate development” to enable it to develop quickly for the past 20 years. The United States accounts for a large part of China’s trade surplus.

Today, the United States has adopted a policy of “separation from China,” which has harmed China’s economy significantly. Furthermore, the long-rumored real estate bubble, which is breaking simultaneously, will be a significant issue.

China’s rapid economic expansion is traditionally driven by real estate development. However, China’s real estate prices have only climbed, not dropped, under the CCP’s supervision and have never been adjusted. As a result, real estate values are skyrocketing, and the bubble may collapse at any time. Furthermore, because the bubble had grown so massive for so long, its collapse would be terrible.

Furthermore, with the government’s support, real estate investing has practically become a nationwide trend. Real estate accounts for around 75% of the average person’s wealth. The real estate bubble has burst, and property values have plummeted, putting everyone in a bad situation. What impact will this have on the Chinese economy? We can make educated guesses based on the Japanese experience.

The Japanese economy was bolstered by a considerable amount of real estate speculation in the late 1980s, which resulted in a massive bubble. As a result, when the bubble burst in the early 1990s, the Japanese economy suffered a significant setback. Then Japan fell into a 20-year slump. China’s current bubble predicament is similar to Japan’s that year.

Furthermore, China’s current international status is extremely negative. The face of the so-called “comprehensive U.S.–China clash” has emerged. The United States completely crushes China, but it also joins forces with its allies to encircle the country. One after another, foreign enterprises have left the nation, causing the Chinese economy to suffer. China’s domestic political situation is likewise tumultuous at the moment. China’s Leader Xi Jinping has launched attacks on several private businesses, sparking widespread concern.

The “Evergrande Thunder” tragedy will undoubtedly result in a slew of firm closures at this tumultuous moment. The impact on banking industry stability will result in China’s “Lehman Incident” (the collapse of the 158-year-old Lehman Brothers financial empire). As a result, China’s GDP will contract significantly, as will national income. If the people refuse to be hurt and band together to defend their rights, the entire country will devolve into chaos.

The absurdity of Xi Jinping’s ambition

Recently, there have been allegations that the Chinese Communist Party (CCP) had “forcefully invaded Taiwan.” The majority of these remarks are based on “Xi Jinping’s ambition and irrationality” pronouncements.

The primary issue stems from Xi’s determination to be the “permanent national leader,” even though his talent and morals are insufficient to persuade the population. So he needed to score, and the easiest way to do so was to “reunify Taiwan.”

Xi may be able to rule China for the rest of his life if Taiwan is reunified. He would go down in history as a significant figure in Chinese history. Xi has wished for this for a long time. As a result, Xi Jinping has consistently made efforts to “reunify Taiwan” since assuming office.

The enhancement of military capabilities and the aggressive promotion of “united front work” with Taiwan have made substantial progress. However, the CCP’s “infiltration and division” of Taiwan, in particular, is hugely concerning. In addition, China is currently experiencing “waves of business closures” and “waves of unemployment,” resulting in a “financial crisis” bringing about “social instability.”

Xi Jinping may launch a war and declare China in a “wartime state.” First, by doing so, he can sway public opinion. Second, it is simpler to maintain control of the situation. The third option is to use war as a means of reforming the country.

Taiwan was the primary choice for a war target, and the Taiwanese could not help but take measures.

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