And if all that weren’t bad enough, China has been accumulating indebtedness faster than it has been growing. When so-called hidden debt is taken into account, the country is now incurring maybe one-and-a-half times as much debt as it is producing nominal gross domestic product, even if the official GDP figures were not substantially inflated, which they most certainly are.
Therefore, just about nobody but Xi thinks this is a good time to take on America, especially with a determined Trump at the helm. Said Jude Blanchette of the Crumpton Group to Bloomberg News, “People are going to look back at this year as the pivot point when Xi Jinping overreached and sparked an international backlash against the Party and China’s development model on multiple fronts.”
That might not stop Xi. As Stephen Roach wrote in the official China Daily Wednesday, “Xi does not do capitulation.” Yes, but by resisting reasonable requests from Washington and other capitals he is effectively setting his own country on fire.
After all, “Chinese swagger” has unintended consequences, as Blohm explained to me: “It’s ‘now or never’ go for broke before eventually going broke.”
Image: U.S. President Donald Trump and China's President Xi Jinping arrive for a state dinner at the Great Hall of the People in Beijing, China, November 9, 2017. REUTERS/Jonathan Ernst