Logistics: Corruption Defeats China


June 10, 2024: China’s 75 year-old Communist government has failed to overcome the corruption baked into Chinese culture during the previous three thousand years of contending states and occasional empires. Corruption only seemed to disappear during the early and middle periods of communist rule, and instead embedded itself in the new government institutions, notably the military services. It reappeared full-bore after the revival of China’s economy by leader Deng Xiaoping, notably with the “Ten Thousand Princes”, aka the openly corrupt progeny of aging communist leaders.

Chinese military corruption is so bad that China is presently incapable of invading Taiwan. President Xi made the appalling discovery last year that China’s navy and air force were so bereft of spare parts as to be mission incapable, and particularly so for several months of constant combat. Plus most of the several hundred newly constructed ICBMs and silos of its Strategic Missile Force had missile fuel tanks filled with water rather than fuel, silo lids that couldn’t open and silo concrete not much more protective than beach sandcastles.

It will take years to produce the aircraft and ship spare parts necessary to make China’s existing armed forces capable of even an attempted an invasion of Taiwan, and longer to produce the additional combat forces capable of winning (assuming the required spare parts for those are produced). The earliest China might mount an invasion is probably about 2026 – 2027. Even then there will be major uncertainties about the serviceability, reliability and effectiveness of China’s military hardware plus the operational capability of its senior officers to conduct a corps level amphibious assault with no combat experience in any of its military services. And the inherent Chinese culture of corruption. Military incompetence and military corruption go hand in hand.

Worse, President Xi and China’s senior Communist Party officials know that China’s senior military leaders lie to them and know that a failed attempt to conquer Taiwan will result in their immediate loss of power with some risk that the Chinese Communist Party (CCP) itself might lose power. China’s aspirations of great power status will die then too.

The Chinese government’s 2023 discovery of the disastrous degree to which corruption crippled China’s military capability may have led it to abandon its objective of conquering Taiwan. The government is acutely aware that its imminent disastrous demographic collapse allows it only a relatively short window of opportunity to conquer Taiwan and achieve great power status. Abandonment of the Taiwan conquest objective might have also entailed a more realistic assessment of other matters, notably blockade by the US Navy.

China’s prior opinion of an American blockade was that it would last only a few months before ending at an international peace conference following China’s short victorious suppression of dissidents on Taiwan. Because the alternative was too horrible to contemplate.

The Chinese government seems to have begun a public relations campaign about its purported effort to prepare China for an American blockade lasting several years. The timing of this is odd as it comes 6-9 months after the 2023 discovery of China’s military inability to even attempt to invade Taiwan. Perhaps the PR campaign is an attempt to cover up the latter by providing an alternate explanation for further delay. Or it might be to educate the Communist Party and Chinese people about the fatal consequences of an American naval blockade before calling off the Taiwan invasion.

A blockade of China by the US Navy lasting several years would be fatal for the CCP and China’s unity as a country. China’s Ponzi-scheme economy exists primarily to create full employment to keep the CCP in power. 40-50 percent of China’s GDP and employment is based on exports, 40 percent of its fuel and 35 percent of its food is imported, and 99 percent of all that goes by sea because the capacity of Russia’s Trans-Siberian Railroad is so limited – equivalent to ten or less super-tankers or mega-cargo ships.

China’s most critical problems in the event of a US blockade will be unemployment, food and potash, especially the latter as it is an absolutely critical fertilizer with China lacking most of what it needs. The Russians can produce and deliver all the potash China needs by the Trans-Siberian Railroad provided the two governments are on good terms. If the Russians don’t send China any potash, there will be mass starvation after about a year.

China will have a direct conflict between fuel needs and keeping employment up. If they accept 40-50 percent unemployment, they’ll have enough fuel because fuel needs will go down that much due to idle factories, mines and construction. But they won’t have the fuel to shift production of export goods to other products, even useless ones, to keep almost half their labor force employed.

So a US blockade means the Chinese Communist Party will suffer its most feared calamity – mass unemployment for the duration of the blockade. The CCP has acted as though that would be a regime-ending event, and we’ll find out if they’re right.

China’s loss of the imported 35 percent of its food supply will not be immediately calamitous as most of that is used to improve their peoples’ diets, not to keep them alive. But loss of their entire meat supply, especially their treasured pork, will make them very unhappy. It’s also possible that there won’t be enough fuel to supply the wholly extravagant amounts of fertilizer China uses to increase food production to the maximum.

The CCP appears to concede that a US blockade would be effective. The US Navy could conduct it from several thousand miles away if it wished, far out of range of even intermediate range ballistic missiles. China’s navy and air force just don’t have the range to project power that far, and its navy couldn’t survive American submarines if they try.

China’s new Taiwan plan assumes that, after a few years of a US blockade, enough nations suffering from loss of trade with China would successfully insist that the US end it. This has many issues, but it assumes that the by-then POTENTIAL renewed trade with China would be that important. Instead things would have changed enormously during the blockade.

First, the mere start of a Chinese attack on Taiwan would bring on an immediate worldwide depression from two different causes, loss of all trade with China, and destruction of Taiwan’s high-tech industry. Taiwan plans to destroy the latter when China invades. China buys most of the world’s fungible raw materials – iron, copper, aluminum, coal, oil, soybeans, etc. The economy of every country dependent on selling things to China, and every country dependent on raw materials and goods from China, will immediately crater. The economy of every country dependent on Taiwan for advanced computer chips, notably CPU’s, will dive.

The two together will be the world’s worst economic disaster since the Great Depression.

The world will quickly start adjusting to the loss of trade with China and Taiwan. Recovery from loss of Taiwan’s high tech industry will take the longest, about five years, due to the very long lead-time required to build such complicated and expensive chip fabrication plants. India, Indonesia and Vietnam will quickly increase production of low-end consumer products. US and Mexico-based 3D manufacturing will be obviously revolutionizing trade after about two years, even if production is only then starting to ramp up. Things will be looking up two years after the Chinese-caused Depression starts, and noticeably improving after three years.

But by then things will be looking pretty bad in China. Its factories and infrastructure will be significantly run down after 2-3 years of lack of maintenance and general disinvestment, as will the shipping formerly carrying Chinese imports and exports. China’s hard currency stocks will be depleted by several years of drawdowns to feed, clothe and house the unemployed 40% of its population. Plus the Chinese people will be incredibly upset and unruly, assuming that the CCP still exists. China’s central coastal area will have broken off by then just to survive as they need fuel and food which can only come by sea. And everyone, including Chinese, will know that their suffering and monetary losses of the past few years were caused by the Chinese Communist Party.

After several years of blockade, the least which can be said about China is that it will be unattractive for foreign investment and have difficulty in obtaining the foreign lines of credit to restart necessary raw materials imports. Because those will be necessary to restart production of exports. Overseas supply chains take years to form. Overseas supply chains with unreliable customers take longer. If the CCP survives that long, it will almost certainly control only the North China Plain while China’s major export-producing areas are concentrated on its central coast.

So several years of a US blockade will effectively end China as we know it, end the CCP, and end China’s attempt to achieve great power status. China lacks the means to survive a long war with the US and its leaders are dreaming if they think they can. If they’re not dreaming, their recently announced plans to survive a blockade are really PR for educating the Party and masses that an invasion of Taiwan is not feasible. If they are dreaming and attack Taiwan, the world will suffer another Great Depression while the Chinese Communist Party will be destroyed and replaced by several successor states.

--Tom Holsinger




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