China has been very belligerent recently. Language used before the war with India in 1962 and with Vietnam in 1979 has been used. Chinese warships are in Japanese territorial waters near the Senkakus in the East China Sea and Chinese troops are in Indian territory in Ladakh in the Himalayas. Strong rhetoric has been used directly to President Biden by Chairman Xi about a visit to Taiwan by Speaker Pelosi, where it appears the US has caved under the pressure. But, why this behaviour.
China is experiencing significant troubles with COVID and its economy. The real estate market that accounts for c30% GDP is deep in trouble. Investors and companies are leaving and stock on the Hang Seng China Enterprises index lost over 10% last month. The Bank of International Settlements estimated Chinese debt to be c290% of GDP in late 2020, and it has worsened. It has even been officially admitted that the 2022 GDP target of 5.5% will be missed. There have been runs on banks and banking fraud is a major issue. This is reflecting badly on Xi.
The 20th National Congress of the Chinese Communist Party is due to take place later this year, probably in October or November. This should have been a simple matter for Xi to be re-elected as Chairman due to the influence of his many supporters in prominent positions and the 2018 change to the CCP Constitution allowing more than two-terms and not having to retire at 68 years old.
But what does this mean for Taiwan? Previously, US and Taiwanese officials estimated a Chinese invasion between 2025 and 2030, yet recently that changed to within the next 18 months. However, with Xi's difficulties, is he looking for an excuse to execute an action from a range of options that he thinks will be popular enough to guarantee him retaining his position: taking over islands near the mainland, through a blockade of Taiwan to a full-scale invasion. Xi views the US as weak, politically-divided, and with a poor economy. He is also aware of Taiwan, Japan and Australia increasing their military capabilities.
How much pressure does Xi feel under? If he feels his position is threatened, he will have to act before the Congress. It may be a factor in his calculations, but 1 October is National Day, that marks the formal declaration of the People's Republic of China on 1 October 1949 and the Chinese Communist Party defeat of the Government of the Republic of China and their retreat to Taiwan (Formosa).
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