Kuala Lumpur, Nov 14 (SocialNews.XYZ) China could be exposed to a combination of three mounting challenges — a succession crisis, a faltering economy and insufficient resources to sustain its authority domestically and expand its influence abroad, a report has stated.
It noted that at stake is not just the country's growth and fiscal model but also the social compact between the state and its people, built on an exchange of material well-being and stability for curtailed freedoms and a suppressed public voice.
“Though few dare to speculate about it publicly, an economic and political perfect storm is bearing down on China. On the political front, Chinese president Xi Jinping has ruthlessly eliminated all potential opposition and centralised power in his own hands. His decimation of the state, party, provincial, and military leadership has left a trail of bodies and resentment, even if the impenetrability of the Communist Party of China (CPC) makes this difficult to establish definitively,” according to a report in 'Free Malaysia Today' (FMT).
The report noted that the economic outlook remains mixed, with downside risks continuing to mount.
While some view China as an unstoppable economic powerhouse combining technological prowess with large-scale manufacturing, others see an economy slipping into a structural slowdown, weighed down by an ageing population, a prolonged property market slump, rising youth unemployment and increasing hostility towards private enterprise.
“Making matters worse, the long-standing source of Chinese dynamism — exports — is vulnerable to policy responses from the US and Europe, which are under immense pressure to address the latest China shock. But perhaps even more worrying is China’s fraying fiscal capacity. Warnings about unsustainable public debt are growing louder everywhere, but the situation in China is distinctive, owing to how it manages—or, rather, fails to manage—taxation,” FMT mentioned.
According to the report, over the last 10 years, personal income tax revenues have contributed a mere 1.2 per cent of GDP on average.
Paradoxically, despite its ideological commitment to collective ownership, China's communist state has increasingly turned to land sales to raise funds, effectively giving up control over one of its most important assets.
While the CPC has demonstrated its ability to silence the population, it has found it considerably harder to collect money from them, the report noted.
The other, and perhaps more consequential, finding is that government revenues and tax collections have been on a downward trajectory for nearly a decade, irrespective of the measurement used.
“For example, taxes (excluding social-insurance contributions) collapsed by nearly six percentage points between 2012 and 2025, from 18.4 per cent of GDP to 12.6 per cent. These are levels associated with a struggling, lower-middle-income country, not an aspiring superpower,” the report highlighted.
It stressed that any assessment of the risk of China descending into disorder must take into account the CPC’s record of exerting control through coercion
“A slow bleed of anemic growth, rising restiveness, and deteriorating services is perhaps likelier. But even if the Chinese miracle ends with a whimper rather than a bang, the consequences may well be yet another global shock,” it noted.
Source: IANS
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