President Trump’s actions are forcing China to face reality. China cannot compete with the US, and its economy is on the verge of collapse.
We’ve reported for years on China’s impending financial collapse. Before COVID we reported on the slowing China economy.
After COVID we reported that if China released COVID intentionally, it may have been to hurt the US and world’s economies because China’s CCP led economy was failing.
The world finally caught up. The numbers coming out of China are bogus. The CCP-led economy is failing. Business Insider reported in October 2023 that China’s economy was in a dire state.
For the past three decades, China has been on the upswing of a supercycle that saw an almost uninterrupted expansion of the country’s capacity to manufacture, appetite to consume, and ability to project power across the world economy. The Chinese Communist Party relentlessly pursued economic development over all else, even when that single-mindedness pushed the party to make debilitating policy mistakes — creating a massive bubble in the property market, saddling provinces with loads of debt, and failing to transition away from an overreliance on investment. There was no time to stop for corrections while China’s mind was on money alone.
This era of expansion was not only a boon for Beijing, it also helped fuel global demand. Countries relied on China’s hunger for speedy modernization and industrial might to supercharge their own development. Even American companies saw China as the next great global market — and made bets accordingly.
They lost those bets.
President Xi Jinping has shifted the CCP’s raison d’être to national security over the economy. Getting rich isn’t China’s big project anymore; the project is power. As a result, both the government’s priorities and behavior have changed. In the past, whenever it seemed like a recession was on the horizon, the CCP came to rescue. There’s no hefty stimulus coming this time. Nor will the explosive growth that experts once expected from China return. Beijing’s relationship with the outside world is no longer guided by the principles of economic rationality, but rather its yearning for political power.
“This isn’t about the economy anymore, it’s all about advanced technology and weaponry,” Lee Miller, the founder of the Chinese economic surveyor China Beige Book, told me.
In response, American businesses need to consider how else Beijing’s decision-making may now be flipped on its axis. For everyone from American farmers to pharmaceutical companies, this means shrinking demand and unstable supply chains. For policymakers, it means a China that is harder to mollify when conflicts arise. For the rest of us, it’s a more precarious world.
The Insider went on to share about China’s real estate market.
It’s been clear for years that the Chinese real-estate market has been in trouble. China has a population of 1.4 billion, but it has built housing for a population of 3 billion, according to expert estimates. Many of the mega-developments became empty monuments to Beijing’s insatiable desire for growth. In Shenyang, farmers have taken over a development of empty mansions for cattle grazing.
Real estate was a quarter of China’s GDP. It inflated the national economy, and now property sits empty. The value of this property is rapidly declining. Polluted skies and empty buildings are not uncommon.
China expert Gordon Chang has also highlighted issues with China’s economy for years. He notes China’s banks are almost certainly insolvent on a balance-sheet basis. In short, on their books, they are showing bad loans as good. When the regime runs out of liquidity, it will collapse in the biggest bank crisis in history.
Chang shares a report on the real estate giants in China that are now in distress.
When Beijing Prices the Banks
Vanke, once China’s model real-estate developer, is now on the edge of default. International rating agencies have already classified it as being in technical default.
Why does this matter? After all, China’s property sector has been in crisis for years. Defaults, restructurings, and liquidations have become routine.
Yet I still can’t feel numb to this one. I spent more than a decade in China’s real-estate business, and Vanke was different. For a long time, it was held up—domestically and internationally—as the gold standard of professional management. From 2014 to 2018, Fortune ranked Vanke No. 1 in the global real-estate sector in its World’s Most Admired Companies list. That supposedly reflected genuine confidence in governance, discipline, and execution.
Attached is a list of China’s top 20 developers in 2021, the peak of the property boom. Half of them—10 out of 20—are now in formal distress. Together, these firms carry roughly RMB 3.5 trillion (USD ~500 bn) in interest-bearing debt, and RMB 9–10 trillion (USD ~1.5 trillion) in total liabilities. And that’s before accounting for the cascading stress on upstream and downstream contractors and suppliers—where trillions more in implicit exposure likely sit.
Also attached is a stock-price chart of China’s five largest banks by assets since 2021. Their shares have risen steadily, even as an industry that once accounted for about a quarter of GDP has collapsed in slow motion.
That divergence is striking—and a reminder that when the state socializes losses and manages the market, investors believes that mispricing risk is not a bug, but can be a strategy. I wonder if this can actually last.
Now add to this, President Trump’s announcement that the US will increase its military spending by 50% to $1.5 trillion per year. This action puts tremendous pressure on China.
Trump Is About to Bankrupt China the Soviet Union Way.
He just set a Soviet-Style trap for China.Trump plans to raise U.S. defense spending by 50% to $1.5 trillion in 2027, about 5% of GDP.
This isn’t about Russia.
Russia’s economy can’t keep up.
This is aimed squarely at China.It’s Reagan vs the Soviet Union—version 2.0.
Beijing now faces a dead-end choice:
Match U.S. spending → crush an already fragile economy
Don’t match it → fall behind militarily and lose face globallyEither way, China loses.
That’s exactly how the arms race bankrupted the USSR.And that’s why Beijing is panicking about this decison.
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