Important Takeaways:

• While we scrimp on defense China prepares for war with everything from a huge nuclear arsenal to a vast, mysterious network of bunkers its population could use to survive an all-out atomic conflict
• Superpower China is running out of steam. As delegates from across the vast country assembled last week for the National People’s Congress [NPC], the Communist Party’s rubber-stamp parliament, Beijing’s economic resurgence is in trouble.
• The global recession triggered by the pandemic has hit China harder than almost anywhere else. World demand for its products, from high-end electronics to cheap plastic ware, has slumped.
• Investors have pulled out as supply chains are ‘de-risked’ to reduce dependence on Chinese imports. And many factories have been caught out by over-production and left with massive stocks that can’t be sold.
• Population decline means Beijing’s astonishingly ambitious national building schemes, with entire cities of skyscrapers springing up where villages once stood, will not now be needed. With millions of new-build homes standing empty, property prices have crashed.
• [but]… a shift to a more insular economy. China has decided, it appears, to pay less lip service to the rest of the world.
• One major source of economic strength continues to thrive, however: China’s military machine. Opening the NPC on Tuesday, Li said defense spending will increase by 7.2 per cent this year. Beijing excels at taking the long-term view and Xi will see two advantages in pouring state wealth into defense
• First, all of that money will be spent in China, creating jobs and improving living standards. Second, China’s international clout will be increased by its burgeoning army, navy and missile arsenals – at a time when most of the West, not least Britain, is scrimping on its defense spending.
• The US cannot match the pace of building in the shipyards of Shanghai, which have already turned out two new aircraft carriers with a third expected to begin sea trials soon.
• The latest vessel, the Fujian, features catapults to launch heavy, fixed-wing aircraft with immense bomb payloads. These shipyards are also building a new type of amphibious assault vessel, and many roll-on, roll-off ferries, which could have a dual purpose – transporting cars in peacetime, and armored assault vehicles in the event of an attack on a neighbor, such as Taiwan.
• While the West has been scaling back its military spending in favor of welfare and healthcare, China has been building artificial islands as naval bases and airfields.
• Most alarming of all is the build-up of nuclear missiles. Throughout the Cold War, though China has been a nuclear power from the mid-1960s, its atomic arsenal was limited.
• That policy has changed. More than 100 nuclear missiles with multiple warheads have already been built and armed, with production expected to exceed 500 by the end of this decade, if not sooner.
• Ultimately, whether the economy is booming or flailing, the 1.4 billion people of China will probably fall in behind their leader for fear of worse.
• For the rest of the world, even an economically stalled China could be that most dangerous of creatures: a wounded dragon in a mood to lash out

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