The year 2022 has not been an easy year for China. The COVID-19 outbreak and subsequent strict censorship measures that led to nationwide protests, as well as the geopolitical challenges the country faces are all but outward signs of the crises the country will soon face, or that it is currently passing through.
In all, there are six such major crises, which we can call China’s “Six Horsemen of the Apocalypse”. These problems are not well known to those who have even a glimpse of the actual situation in the country, although they have not always drawn as much attention as they should.
First of all, China is one of the countries facing a serious demographic problem in the form of population aging. The catastrophic impact of this is clearly visible in the current pandemic. There are countless discussions and reports about the spread of COVID-19 in the country, many of them impressive. However, as China’s population ages and grows older, other common diseases, such as the influenza virus, could have an equally disastrous outcome – or even worse. Older people have worse survival rates from such diseases, so an older population means more deaths. Thus, the epidemic crisis in China is actually a manifestation of the geriatric crisis, which has been seen in the exhaustion of public medical resources, and even social resources, including funeral preparations.
The second of these riders would be A.J food crisis, which has a lot to do with how land is used in China. During the real estate boom at the end of the 20th century, land became a profitable resource, and little of it was used in the agricultural sector. Given the country’s huge population, without enough land to grow food, the issue of feeding its people becomes insoluble for China. At first, China could only import foodstuffs from other countries, but the problems kept increasing. With the outbreak of the Russo-Ukrainian War, securing food supplies to China became a prominent issue. After all, China relies heavily on wheat, sunflower oils, fertilizers, corn, barley, and other food products from Ukraine and Russia for domestic consumption and food production.
China is also in a state of crisis regarding religion. With problems constantly arising and property values constantly declining, it appears that the debt situation is already in crisis, and will only get worse in the future. Under these circumstances, other countries may resort to macro-financial control capabilities, such as raising interest rates, but it will be difficult for China to do so. Since China has a huge amount of household debt, raising interest rates will lead to serious social unrest, as evidenced by the mass refusal by homebuyers to pay off mortgage loans in 2022. Such a situation means that the financial crisis in China has deepened to the point that The People’s Bank of China has significantly lost its ability to regulate monetary policy by raising interest rates.
The fourth knight is Geopolitical crisis faced by China. For a long time, China seemed to truly believe that its rise had nothing to do with global geopolitics, and that what it achieved depended entirely on the hardworking Chinese themselves. However, the ongoing war in Ukraine has opened a window for China to see the complexity of geopolitics. Thus, like it or not, China has to face the onslaught of the geopolitical steering wheel.
The next knight is supply chain crisis, as a result of the era of globalization. China is deeply involved in globalization and is the biggest beneficiary of it, but Beijing has neither the ability nor the desire to do more to sustain the globalization process because it is under increasing pressure. China’s ambiguous attitude towards major events such as the war in Ukraine, which seriously shattered globalization, naturally promoted the decline of globalization. In the massive shift from globalization to deglobalization, the supply chains of all sectors in the world will inevitably be restructured, reorganized, and reshaped. This would involve a lot of capital, as well as a large number of bankruptcies and debts.
The supply chain crisis is already severely affecting China. For example, China is facing sanctions and restrictions in the semiconductor sector, and this is not entirely due to geopolitical factors. It is also a by-product of supply chain restructuring in various countries seeking to build self-owned, reliable and risk-resilient supply chains. This is exactly why the United States will go to great lengths to bring TSMC into the country for production.
The ultimate knight facing China is urbanization crisis. Considering all the crises related to China’s economy and society, many of them are self-inflicted because the root cause is the abnormal development of China’s urbanization. China is a country severely divided between urban and rural areas. Before urbanization, the urban population was less than 100 million, and the remaining about 700 million lived in rural areas. China’s population is now 1.4 billion, of which more than 880 million live in cities. This means that hundreds of millions of rural people have been (or have been) pushed into the cities.
As a by-product of this rapid change, the cities remained in some sense villages, with village-style administration superimposed on urban administration. This means that the style of governance has become more direct, simplistic and even blunt.
What is more dangerous is that urbanization always requires a large amount of land for real estate. When real estate booms, it will destroy other industries and create an economic crisis. Therefore, China’s economic crisis is only a superficial reflection of the more profound urbanization crisis. Urbanization could, after paying off the golden decade for the Chinese economy, lead to a decade or more of economic stagnation.
Failure to understand the reality of these crises would hinder the Chinese authorities’ management, mitigation, adaptation, and means of addressing the problems. The end result will be unspeakable social tragedies. For example, the crisis we are seeing in public medical resources today, although it is being driven by the outbreak of COVID-19, is in fact a manifestation of an aging crisis at its core.
In the future, these Six Horsemen of the Apocalypse will definitely appear, setting off shock waves that will travel to the deeper level of society, causing more and more real problems and conflicts.