Is there a 'ticking time bomb' lurking in China's economy?

The Chinese economy has been hit hard by a string of negative developments over the past half year, including sluggish growth, record levels of youth unemployment, low levels of foreign investment, weak exports and currency, and a housing market that is in crisis.

Joe Biden, the Vice President of the United States, recently referred to the economy of the world's second-largest country as "a ticking time bomb," warning that public dissatisfaction will continue to rise.

In response, the leader of China, Xi Jinping, defended the "strong resilience, tremendous potential, and great vitality" of the economy.

Who then has the better argument, Mr. Biden or Mr. Xi? As is so frequently the case, the answer is most likely to be found somewhere in the middle.

China is facing enormous challenges that have their roots deep in the ground, despite the fact that the economy is not likely to collapse anytime in the near future.

A housing shortage combined with lower-income households
The country's real estate market lies at the heart of China's ongoing economic woes. Up until quite recently, a third of its total wealth was held in the form of real estate.

"Nothing about this made any sense. This makes absolutely no sense at all, according to Antonio Fatas, an economics professor at the INSEAD business school in Singapore.

Over the course of two decades, the industry flourished as a result of developers riding a wave of privatization. However, the problem didn't start until 2020. A widespread epidemic and a population decline within one's own country are not favorable conditions for an unrelenting program of housebuilding.

The government, fearing a financial collapse similar to the one that occurred in the United States in 2008, then placed limits on the amount of money that developers could borrow. They quickly ran up billions of dollars in debt that they were unable to repay.

Now that demand for houses is significantly lower, property prices have significantly decreased. As a result, Chinese homeowners, who had been subject to stringent coronavirus limitations for the previous three years, are now in a worse financial position.

"In China, property is effectively your savings," explains Alicia Garcia-Herrero, head Asia economist for the asset management firm Natixis. Up until very recently, it appeared to be a better option than investing your money in the unpredictable stock market or in a bank account with poor interest rates.

This indicates that, in contrast to the countries of the West, there has been neither a huge spending boom nor a major economic bounce back after the pandemic.

"There was this notion that Chinese people would spend like crazy after zero-Covid," Ms. Garcia-Herrero recalls. "There was this notion that Chinese people would spend after zero-Covid." "They'd go on vacation, visit Paris, and purchase the Eiffel Tower. But in reality, they were well aware that the decline in house values would put a significant dent in their savings, and as a result, they have made the decision to save whatever cash they have on hand.

Not only has this circumstance given the impression that households are in a worse financial position, but it has also contributed to the worsening of the debt crisis that the country's local governments are currently experiencing.

It is estimated that more than one third of their multi-billion dollar sales come from selling land to developers, which is an industry that is currently experiencing a crisis.

It is anticipated that it will be several years before the current turmoil in the housing market begins to ease.

A faulty model of the economic system
The real estate crisis has also brought to light weaknesses in China's economy and the way it operates.

Building was the driving force behind the country's phenomenal economic expansion during the past three decades. Construction was responsible for everything from industries and airports to residences, bridges, and train lines.The execution of this task falls under the purview of the various municipal governments.

Nevertheless, there are some economists who claim that this strategy is beginning to hit a brick wall, both figuratively and physically.

Yunan province in China, which is located close to the border with Myanmar, is home to one of the more peculiar manifestations of China's compulsive need to construct new structures. This year, officials there affirmed, for some inexplicable reason, that they would go forward with plans to build a new Covid-19 quarantine facility that would cost multiple millions of dollars.

The amount of pressure that is being put on heavily indebted local governments is so great that this year it was revealed that some of them were selling land to themselves in order to fund building programs.

The fact of the matter is that there is a limit to the amount of infrastructure that China can construct before it begins to be a financial drain. The nation must look into new means of providing prosperity for its population in order to move forward.

Professor Fatas believes that "we're at an inflection point" at the moment. "The old model is ineffective, but in order to shift focus, serious structural and institutional reforms are required."

For instance, he contends that if China desired to have a financial sector that could fire up its economy and compete with those of the United States or Europe, the Chinese government would first need to significantly relax regulation, giving a significant amount of authority to private interests.

In point of fact, the reverse has come to pass. The Chinese government has tightened its control over the financial industry, chastised "westernised" bankers for their hedonistic behavior, and increased pressure on large technological companies such as Alibaba.

The high unemployment rate among young people is one manifestation of this phenomenon. Millions of college grads across China are having trouble finding respectable white-collar work in the country's major cities.

Figures from July showed that the unemployment rate for job searchers between the ages of 16 and 25 reached a record high of 21.3%. The decision to stop publishing the numbers was made public by the relevant authorities the following month.

Professor Fatas believes that this is evidence of a "rigid, centralized economy" that is finding it difficult to accommodate such a large number of people into the labor field.

When it comes to constructing a new bridge, a top-down approach is the most efficient method; but, when the bridge in question has already been constructed but people are still looking for work, this approach appears to be tedious.

What actions will the government take in this situation?
A shift in the way we think about politics is necessary for an economic course correction. It doesn't appear that this will happen, given how recently the Chinese Communist Party (CCP) has been increasing its grasp on everyday life and how President Xi has been tightening his grip on the CCP. There is a possibility that those in charge will argue that it is not even required.

China is, in some senses, a victim of its own success as a nation. The current pace of growth is only regarded as "slow" when measured against the staggeringly high numbers recorded in earlier years.

China's annual GDP has increased by almost 9% on average every year since 1989. It is anticipated that this figure will be at around 4.5% in 2023.

It is a significant decrease, but it is still far higher than the economies of the United States, the United Kingdom, and most of the countries in Europe. Some people hold the opinion that this situation is ideal for China's top leadership.

The spending of individuals is typically the primary driver of economies in the West, but Beijing is suspicious of the consumerist paradigm. Not only is it seen to be wasteful, but it also demonstrates a strong sense of individualism.

It may assist to stimulate the economy if consumers are allowed to purchase new televisions, subscribe to streaming services, or go on vacation; yet, this does little to improve China's national security or its competitiveness with the United States.

Mr. Xi's ultimate goal is growth, but not expansion simply for the sake of expansion. It's possible that this is what's behind the current boom in cutting-edge industries like semiconductors, artificial intelligence, and green technology. These are all things that keep China globally competitive and make it less dependent on other countries and companies.

This concept may also shed light on why the government has taken such a muted response to the weakening economy. Instead of pouring enormous sums of money into the economy, all that has been done so far is some minor adjustments, such as loosening restrictions on borrowing or lowering interest rates by a fraction.

Investors from other countries who have money invested in China are understandably concerned and want the Chinese government to respond swiftly, but those in power appear to be playing the long game.

They are aware that, conceptually speaking, China still possesses a tremendous capacity for even further economic expansion. Even though it is an economic powerhouse, the annual income of its residents is only $12,850 on average. There are still about 40 percent of people who choose to live in rural areas.

Therefore, on the one hand, China has been afforded and will continue to be afforded the luxury of taking such a long-term view since it is not linked to election cycles.

On the other hand, many economists are of the opinion that a political system that is authoritarian cannot coexist with the kind of flexible and open economy that is required to achieve living standards that are comparable to those of nations that are classified as having "high income."

It is possible that Mr. Xi places an emphasis on ideology above efficient governance, or control over pragmatism. These are both potential outcomes.

When the economy is functioning well, this is often acceptable for the vast majority of people. But now that China is emerging from three years of zero-Covid, with many people finding it difficult to find work and the value of family homes plummeting, the narrative is very different.

This brings us back to Mr. Biden's "ticking time bomb" statement, which hints at the possibility of civil upheaval or, even more gravely, some type of dangerous action taken in response to it on the international front.

However, at this point in time, that is nothing but speculation. China has successfully navigated its way out of a variety of crises in the past. However, there is no question that the leadership of the country is currently confronted with a particular set of difficulties.

Are they concerned about the way things are currently going? "Of course, they are aware of the statistics," explains Professor Fatas.

"Are they conscious of the tasks that must be completed? I can't say for sure. My best opinion is that they are overlooking a few things that are absolutely necessary for the development of China.

Terry Gou is a Taiwanese iPhone billionaire with aspirations of becoming the country's president

Terry Gou, a 72-year-old millionaire and the creator of Foxconn, which is responsible for manufacturing iPhones, is the newest candidate to enter the contest for the presidency of Taiwan.

Mr. Gou is a magnetic entrepreneur who rose from humble beginnings to amass a fortune, a large amount of cash, and significant name recognition. According to observers in Taipei, Mr. Gou would have a decent chance of winning the election if he was the only candidate running against the Democratic Progressive Party (DPP), which is currently in power. However, he is not.

Instead, the opposition vote in the presidential election that will take place in January 2024 will be split three ways due to his candidacy.

When there are already two opposition candidates fighting to overthrow the incumbent party in a presidential system that awards all of the seats to the winner, adding a third candidate to the mix is probably not going to make the process any simpler.

The situation is a textbook illustration of the "law of holes," which states that if you find yourself in a hole from which it is difficult to escape, the first step you should take is to cease digging. It would appear like Taiwan's opposition is digging its own electoral grave at this point.

On Monday, Mr. Guo made his candidacy for an election that will have significant repercussions well beyond the borders of Taiwan public, and this is exactly what happened. An election for a new president will take place on the self-governing island in the midst of escalating threats from Beijing and an increasingly militarized region.

Mr. Gou, much like another charismatic billionaire on the other side of the Pacific, initially tried to have himself nominated as a candidate for Taiwan's most prominent center-right party, the old nationalist KMT (Kuomintang). In contrast to his success in the United States, he was unsuccessful.

As a result of the KMT's selection of another candidate, Mr. Gou resigned from the party. However, Mr. Gou's predicament is not only dependent on the KMT.

The Taiwan People's Party (TPP) is another opposition party in Taiwan, and Ko Wen-je, another popular populist, serves as the party's leader. Mr. Ko served as the mayor of Taipei city in the past, and he is now in second place in the polls. The younger generation of Taiwanese voters is very favorable to him.

It's not just his money and successful business career that make Mr. Gou such an attractive prospect. It is based on his job experience both in China and with the country.

Foxconn, also known as Hon Hai industries, is the largest electronics manufacturer in the world since it was the first company to pioneer the idea of merging the engineering know-how of Taiwan with the trained labor of China. Mr. Gou established massive industrial campuses in the south of China in the 1980s and 1990s, and he hired tens of thousands of young Chinese people to work there.

Because the strategy was so effective, he was finally able to convince Apple to contract out a significant portion of the production of MacBooks and iPhones to Foxconn. Because of this, Foxconn became the most successful company in Taiwan, and Mr. Gou became one of the wealthiest businesspeople in the country.

Now, Mr. Gou thinks that he can use the experience he gained investing and working in China to safeguard Taiwan's safety. Terry Gou has stated that one of his goals is to keep Taiwan from "becoming another Ukraine." In his announcement that he was running for office, he stated that he would lead Taiwan "back from the abyss of war with China."

He is not the only one who views the danger posed by China as becoming more severe as time goes on. Over the course of the past year, Beijing has significantly ramped up its military actions in the region surrounding the island.

The People's Liberation Army (PLA) published a professionally produced propaganda video the previous week, in which it showed Chinese troops engaging in what appeared to be training for an invasion of the beaches of Taiwan.

China takes retaliatory action in response to Japan's release of purified nuclear water following the Fukushima disaster

The contentious dumping of treated waste water from the Fukushima nuclear plant into the Pacific Ocean has begun in Japan, which has sparked protests in the surrounding area and retribution from Beijing.

China is Japan's largest customer for fish, but on Thursday, China said that it will stop all imports of seafood from Japan.

The Japanese government maintains that the water is safe to drink, and numerous scientists concur. The idea has also received approval from the nuclear watchdog of the United Nations.

However, detractors argue that the release should be postponed until additional research has been conducted on the topic.

Over the next three decades, the nuclear reactor will release more than one million metric tons' worth of water that has been stored there.

China, which has been the most outspoken opponent of the plan ever since it was disclosed two years ago, referred to the water discharge as a "extremely selfish and irresponsible act" and claimed that Japan was "passing an open wound onto the future generations of humanity."

Shortly after that, China's customs agency made the announcement that an existing ban on seafood imports from Fukushima and some other prefectures in Japan will immediately be expanded to cover the entirety of Japan in order to "protect the health of Chinese consumers."

The measure is intended to have a negative impact on the economy, and Japan has acknowledged that its companies will suffer a "significant" loss as a result. Together, Mainland China and Hong Kong make up about half of Japan's total seafood export revenue, purchasing more than $1.1 billion (£866 million) worth of seafood from Japan each year.

Analysts, however, believe that the responses from China, in particular, are driven more by politics than they are by real concerns.

The relationship between Tokyo and Beijing has worsened in recent years as a result of Tokyo's growing proximity to the United States and its support for Taiwan, a self-ruled island that is claimed by China.

The Fukushima controversy has a negative impact on Japan's seafood industry.

"This incident is more of a symptom than a cause of worsening Sino-Japanese relations," said Chinese foreign policy expert Neil Thomas with the Asia Society Policy Institute. "This incident"

If Beijing's relationship with Tokyo was in a better situation, it's possible the Chinese capital would have made less of a fuss about the water release.

In response, Japan is likely to "reject this criticism, but they are unlikely to do anything provocative," according to James DJ Brown, a professor at Temple University's Japan campus who specializes in Japanese foreign policy. Brown is quoted as saying that Japan is unlikely to do anything else that could be considered provocative.

"Even though the government of Japan is deeply troubled by what it views as the aggressive actions of the Chinese Communist Party, they are aware that it is in their best interests to maintain stable relations with their larger neighbor."

On the other hand, the delay might not be necessary for very long. Some commentators are of the opinion that China will not continue to enforce the prohibition.

According to Mr. Thomas, "China's growing economic difficulties could mean that any ban is relatively brief and narrow, so as to limit the negative impact on Chinese importers and business sentiment," and he added this.

In addition, certain Japanese seafood has been prohibited on the market in South Korea for a very long time. On the other hand, the response from the authorities of that country on Thursday was more quiet.

"What is important now is whether Japan, as it promised to the international community, strictly follows the scientific standards and transparently provides information," Prime Minister Han Duck-soo said.

Despite their long-standing animosity toward one another, South Korea and Japan have grown closer in recent years. They stand together in their support of the together States while confronting the dangers posed by China and North Korea.

On the other hand, the vast majority of people living in South Korea are against the release of the water, and on Thursday demonstrators in Seoul attempted to storm the Japanese embassy. Hong Kong and Tokyo each saw their own versions of the angry demonstrations.

In the meantime, Mark Brown, the chair of the Pacific Islands Forum, which had criticized the idea in the past, stated that the organization now believes the plan "meets international safety standards."

"Negligible impact" on the surrounding natural environment

Since the Fukushima nuclear power plant was destroyed by a tsunami in 2011, the power plant company Tepco has been continuously pouring water into the reactors in order to cool down the fuel rods. This indicates that the factory produces contaminated water on a daily basis, which is then treated and stored in extremely large tanks.

Even after being treated, the water still has unacceptable quantities of the radioactive chemicals tritium and carbon-14, both of which are difficult to eliminate. The answer that Japan has come up with is to first dilute it with seawater and then release it into the ocean.

In spite of the fact that over one thousand tanks have been refilled, Japan maintains that this cannot be a viable long-term solution. It has been maintained that the water can be safely discharged after it has been treated and diluted.

The plan has received support from a significant number of scientists, who believe it to be plausible. The International Atomic Energy Agency of the United Nations has also stated that the plan satisfies international criteria and that it would have a "negligible" impact on the environment if it were implemented.

The authorities have committed to keeping a high level of transparency while also assuring that the radiation levels in the ocean would be regularly monitored.

However, there are some people who are still skeptical in light of Tepco's track record. The firm has in the past been accused of not being transparent enough regarding the accident, which is something that it has now apologized for.

Even though it is regular procedure for nuclear reactors to dispose of treated water in the ocean, opponents have pointed out that the amount that is being released from Fukushima is on a scale that has never been seen before and is far larger.

Some researchers believe that there should be a greater emphasis placed on research into the potential effects that it might have on the seafloor and on marine life. Greenpeace, an organization that advocates for environmental protection, is likewise in favor of keeping the water contained within the tanks until more advanced methods of water treatment are developed.

The idea has caused coastal towns and fishermen in Japan a great deal of ire in particular. They are concerned that it will damage their ability to make a living because some frightened consumers will avoid purchasing fish from the area, which has not fully recovered economically since the tragedy that occurred in 2011.

According to the most recent polls, there is a significant gap in opinion regarding the subject among the general population of Japan, with just half of respondents backing the release of the water.

Keiko Kisei, a demonstrator in Tokyo, told Reuters on Thursday that she believes there should have been many other means... rather than dumping it into the water. "I think there should have been many other methods," she said.

"However, they made the decision to release the water and so cause problems for the rest of the world. It defies all reasonable expectations in every way.

Japan is planning to release cleaned water within the next 48 hours in response to the nuclear tragedy at Fukushima

In spite of protests from its neighbors, Japan is going ahead with plans to begin releasing radioactive water that has been treated from the tsunami-hit Fukushima nuclear facility into the Pacific Ocean on Thursday.

The decision was reached some weeks after the nuclear inspector of the UN gave its approval to the scheme.

Since the facility was wrecked by the tsunami in 2011, around 1.34 million metric tons of water have accumulated. This amount of water is sufficient to fill 500 pools of Olympic size.

Following filtration and diluting, the water will be made available to the public after a period of thirty years.

After a Cabinet meeting on Tuesday, Japanese Prime Minister Fumio Kishida stated that the authorities will make a request for the plant's operator to "promptly prepare" for the disposal to begin on August 24 if the weather and sea conditions are suitable.

After Mr. Kishida's visit to the plant on Sunday, rumors began to circulate that the release was about to take place.

The plant is located on the east coast of the country, roughly 220 kilometers (137 miles) north-east of the capital city of Tokyo. According to the government, releasing the water is a vital step in the lengthy and expensive process of decommissioning the plant, which is located on the east coast.

Since more than a decade ago, Japan has been collecting and storing the contaminated water in tanks, but there is a limited amount of room in the tanks.

In 2011, a tsunami that was brought on by an earthquake measuring 9.0 on the Richter scale flooded three reactors at the Fukushima Daiichi Nuclear Power Plant. Since the nuclear accident at Chernobyl in 1986, this event is considered to be the worst nuclear tragedy in the world.

Soon after that, the authorities established an exclusion zone, which continued to be increased as radiation spilled from the facility. As a result, almost 150,000 people were had to evacuate the region.

Concern and rage have been expressed regarding the Fukushima nuclear waste plan.
Since the plan to release water from the plant was approved by the Japanese government two years ago, it has created worry across Asia and the Pacific.

In July, it was given the go light by the nuclear watchdog of the United Nations, which came to the conclusion that the effects on both people and the environment would be insignificant.

However, a large number of people, notably fisherman in the area, are concerned that dumping the treated water will have a negative impact on their means of subsistence.

In addition, on Tuesday, a large group of demonstrators gathered in front of the official residence of the prime minister in Tokyo. They demanded that the government put a halt to the release.

Operators of the plant Even though Tepco has been filtering the water to remove more than 60 radioactive compounds, the water will not be completely free of radiation since it will still contain radioactive isotopes of hydrogen and carbon that cannot be easily removed from water. These are radioactive isotopes of tritium and carbon-14.

However, because to the extremely low levels of radiation that they release, specialists agree that they pose no threat to human health unless they are taken in very large quantities.

According to Professor Jim Smith, who teaches environmental science at the University of Portsmouth, "as long as the discharge is carried out as planned, radiation doses to people will be vanishingly small - more than a thousand times less than doses we all get from natural radiation every year." This statement was made by Professor Jim Smith.

The tainted water is also being released into a large body of water, namely the Pacific Ocean, which is another concern brought up by the experts.

According to Professor Gerry Thomas, who teaches molecular pathology at Imperial College London, "Anything released from the site will therefore be massively diluted" because of the surrounding environment.

Presented for your consideration: the frantic struggle to avert 2011's catastrophe

The city of Tokyo has stated in the past that the water that is going to be released into the Pacific Ocean, which has been mixed with saltwater, contains levels of tritium and carbon 14 that are acceptable for human consumption.

It is common practice for nuclear power stations all around the world to discharge waste water that contains levels of tritium that are higher than those found in the water that was treated at Fukushima.

However, the idea has been met with outrage from the countries that are nearby, with China being the country that has voiced its opposition the most. It made the accusation that Japan was using the water as its "private sewer."

On Tuesday, the spokesperson for the Chinese Ministry of Foreign Affairs, Wang Wenbin, repeated Beijing's protest to the proposal and said that China would take "necessary measures to safeguard the marine environment, food safety, and public health."

According to Mr. Wang, Japan is "putting its own self-interest over the long-term well-being of all humankind" by allowing waste water to be released into the environment.

Hong Kong announced that it would "immediately activate" import restrictions on a number of food products manufactured in Japan.

Fish imports from the Fukushima region have already been prohibited in South Korea and China respectively.

However, the government of South Korea has given its approval to the scheme and has accused the demonstrators of engaging in scaremongering.