By: Therese Shaheen – nationalreview.com – February  27, 2022

In Beijing, the two leaders stood together, in a show of diplomacy and convenience, against a common superpower foe. There are many unresolved issues between them, but it seems clear there is enough shared interest in holding the third power in check that the meeting was worth the risks. This may describe the recent meeting between Russian president Vladimir Putin and Chinese president Xi Jinping, who discussed their alignment of interests against their mutual adversary the United States. But that description applies also to the meeting, 50 years ago this week, between Richard Nixon and Mao Tse-tung, who changed the arc of the Cold War by aligning the two countries’ interests against the Soviet Union.

Mao’s fourth wife, Jiang Qing, a former actress and member of the Gang of Four architects of the Cultural Revolution, used traditional Chinese opera to create a revolutionary body of work extolling the virtues of the party. One of those works, the ballet The Red Detachment of Women, was performed for Nixon during his trip. The story mythologizes the all-woman infantry unit that survived an onslaught by the Nationalists on Hainan Island in the 1930s. (The Nationalists, of course, later moved their capital to Taiwan and served as convenient antiheroes in PRC propaganda.)

If we fast-forward a half century from Nixon’s night at the theater, though, it isn’t traditional Chinese ballet and revolutionary propaganda that best characterizes the present-day successor to Mao, President Xi Jinping. For that, one should consider the more nuanced and ancient performance art known as bian lian (“face changing”), which has a rich history in Chinese opera. The art form is passed down through generations of performers in the same family, traditionally only to males. In its execution, the dancer uses a variety of subtle, surreptitious techniques to change his visage, undetected by the audience and concealing his true identity. The crowd, watching in astonishment as the face changes before their eyes, cannot tell how it happens.

Throughout Xi’s reign the world has been presented with an ever-changing array of impressive images to create an impression of strength and achievement and to mask the troubles that now are becoming too obvious to ignore. One can hardly fault the Chinese Communist Party, since the West until recently seemed to want to be fooled by China’s façade of success and dominance. But the reality is becoming hard to miss. Beijing put on a brave face to host the recent Olympics against a diplomatic boycott by the United States and other democracies. In the seven years since the city was selected to host the games, world attitude toward China turned quite negative and then hardened against the China Communist Party for snuffing out Hong Kong’s democracy, ramping up oppression of its Muslim minority population, continuing its belligerence toward its neighbors, mishandling and obfuscating the source of the coronavirus pandemic, and promoting the rise of an abusive totalitarian state. Behind the mask of pageantry and spectacle that the Olympics represented, the combined impact of the pandemic and a slowing economy weighed down by massive debt is too obvious to be ignored.

Since the beginning of the global health crisis, China has presented the face of resolve. It posed as the one large country seeming to have emerged from the crisis because of the disciplined application of public-health protocols, aggressive contact tracing and quarantines, and a “zero Covid” policy. No less than a leading World Health Organization official, Canadian epidemiologist Bruce Aylward, swooned under the illusion early on, saying, in February 2020, “If I had the Covid-19 virus, I’d want to be treated in China.”

Since then, of course, we’ve seen a harsh reality emerge: forced quarantines, children separated from their parents, expatriate employees of global companies leaving Hong Kong to avoid the draconian measures, and a stream of complaints from Olympic athletes about how they were being treated for the privilege of competing. The rapid transmissibility of the Omicron variant has laid bare Beijing’s zero-Covid philosophy. Hong Kong is seeing record caseloads, and the chief executive is asking developers and hotels to make thousands of rooms available to house quarantine cases as Beijing demands that the local government take all possible measures to hold back the tide.

Quite apart from the pandemic, another mask the country wears is one of cosmopolitan growth: the perception of glamorous, modern cities driven by enlightened urban planning and a real-estate-investment boom. But the reality is fooling fewer people now. Evergrande, one of the country’s largest real-estate developers, faces more than $300 billion in debt and has defaulted on more than $1 billion. Economic growth is slowing further as the debt-inflated real-estate bubble loses air. This is impacting ordinary citizens who have come to rely on the perception of ever-rising property values to build wealth by buying and flipping properties that they never intend to occupy, all in the hope that the music doesn’t stop, which it now has.

Another feature of this overgrowth are the skyscrapers that dominate the skylines of Beijing, Shanghai, and other cities across China. In the largest (“first tier”) cities, though, is another grim reality, vanity projects. Consider Shanghai Tower, a showcase that opened to much fanfare in 2016 as the second-tallest in the world. The building has more external appeal than practical usage factored into its design. It reportedly has the world’s fastest elevators, a unique twisting design meant to provide dramatic facades and efficient use of external light and climate control. It is touted as one of the world’s most sustainable mega-tall buildings.

All of this, though, hides the less impressive fact that the design creates inherent inefficiencies in the use of interior spaces, driving up the cost of usable square footage. It languished at low occupancy, with just 70 percent committed by 2017, although only about a third of the building was occupied. Permitting issues delayed the completion of the building for three years beyond its initial target. Outside these first-tier cities, elsewhere in China there are widespread cases of shoddy construction and health-and-safety issues with commercial buildings, as social media criticize and document the failures. They are widely referred to as “tofu buildings,” given their fragile and unstable construction.

The experience with Shanghai Tower is symptomatic of the fact that projects such as this cost too much and bring too little or no value in return. With the economy slowing and the pandemic intruding into every aspect of life for China’s citizens, Xi Jinping’s push for “common prosperity” demands a face-changing move away from ostentation and excess. Authorities in late 2021 cracked down with a decree stipulating that buildings taller than 150 meters would require more-challenging approvals and be limited in number. Buildings more than 250 meters will be banned in cities with fewer than 3 million people. The Shanghai Tower, at 632 meters, stands as a monument to form over substance, the unpleasant face behind the mask of China’s urban modernization.

So, too, with the perceptions of China’s high-tech transit boom. On its face, China’s high-speed rail is the world’s most modern and efficient. Officials boast of nearly 25,000 miles of track, connecting nearly 75 percent of cities of more than 500,000 people, traveling at speeds more than 200 mph: the envy of rail enthusiasts around the world, who laud its efficiency and vision.

As with Evergrande’s ghost cities and failed vanity-project skyscrapers, the truth is less attractive. According to some estimates, the system loses nearly $25 million a day, and the debt-fueled cost of construction of tens of thousands of miles of rail is approaching $2 trillion. Not unlike gleaming skyscrapers marked by low occupancy and questionable utility, the high-speed-rail system is rife with inconsistencies. There was so much official corruption in various aspects of its construction that in 2011 the Railways Ministry imposed speed restrictions in the network, owing to safety concerns given the construction shortcuts. So it is a high-speed-rail network operating with government-imposed speed restrictions. Program and network costs put ticket prices beyond the reach of rural and urban workers alike, which is most of the country. The longest line in the system, running through the Gobi Desert, is beset with sand-related limitations on speed, with high winds that have caused derailments, and with other operability challenges in the inhospitable terrain. The route makes no sense in the first place, beyond its being just a government-inspired jobs program. How many people are really taking a train across the Gobi Desert, to and from Xinjiang Province, where more than a million Uighurs live in forced detention?

The South China Morning Post has reported that debt of the China National Railway Group had risen to about $900 billion by September 2020. That exceeds the $600 billion GDP of the city of Shanghai, according to the U.S.-based site China Insights, which, in a video report from November 2021, labels the system “the next Evergrande.” China Insights reporters estimate that the true debt may be double that, as the cost is borne equally between the national and local governments.

This hemorrhaging of money is the result of obvious factors: high-speed trains that go nowhere; ticket costs that are out of the reach for most people; the inability of high-speed trains to carry cargo, which would offset the cost of operation and help to reduce passenger fares; and the existence of affordable conventional rail options for people on routes they commonly travel. The upshot is that, beyond the hype of this allegedly modern marvel, China’s high-speed-rail network has half the ridership density as Japan’s Shinkansen bullet-train system.

The CCP wants the world — and even its own citizens — to focus on gleaming skyscrapers, modern high-speed trains, and “zero Covid,” instead of noticing the failed skyscrapers, half-empty trains to nowhere, and collapsing real-estate values leaving middle-class savers in peril. The PRC’s face-shifting has diverted attention from the many challenges the country faces, but that too is changing. The debt crisis has become acute at the local level. Local government funding vehicles (LGFVs) are government-backed mechanisms that can issue debt on behalf of a municipality, but off the municipality’s books. Cities have become overdependent on the revenue generated by selling bonds to real-estate developers. The LGFVs have the implicit backing of the local government, much as Fannie Mae and Freddie Mac issued debt off the government books despite the implied government backing, a practice that contributed to the mortgage-led global financial crisis in 2008.

China created a façade of continued growth and prosperity through the global financial crisis by accelerating government spending on vanity buildings, infrastructure including high-speed rail, and other job-creation programs that led to massive levels of debt. Total debt to GDP has doubled to about 300 percent since 2008. Self-fooled, Western financiers and investors saw what looked like endless growth and poured more into the country, believing that China’s enlightened policies had bested the West.

But CCPs financial crisis has arrived. Evergrande’s inability to roll over its debt and falling real-estate values have reversed the cycle of seeming endless appreciation. Local municipalities are laying off city workers, and some have declared bankruptcy with debt five or six times the local GDP. Real-estate prices are falling. According to recent reporting in the South China Morning Post, 30 of 31 provinces and municipalities were operating in the red at the end of 2021. Tibet had a deficit seven times its revenue. The International Monetary Fund and others estimate that LGFV debt in China in 2020 was as high as $8 trillion, or more than half the country’s GDP. Evergrande’s $300 billion debt challenge is a small matter alongside that level of red ink, which even the central government cannot readily address.

The Olympics diversion is over, and the march begins toward October and the 20th Party Congress, when Xi Jinping begins his third term as maximum leader. The problems won’t go away, so the world should expect a series of other face-changing exhibitions. The pandemic will continue to take its toll, and the ineffectiveness of the Sinovax vaccine and the failure of the zero-Covid policy will grow plainer. We should expect other diversions — saber-rattling in the South China Sea, provocations toward Taiwan, further oppression in Hong Kong, and grand diplomatic gestures such as Xi Jinping’s embrace of Vladimir Putin in his standoff with the U.S. and Europe over Ukraine.

The PRC has worked hard to create the perception that it is a strong, growing, important emerging power. The world accepts that claim with less skepticism and challenge than it deserves. That is beginning to change, as the underlying difficulties endemic to the country become obvious: an aging population with no real safety nets, hundreds of millions of people who live in poverty, a totalitarian government and police state led by the subject of a cult of personality, and an economic system weighed down by massive debt and too few affluent consumers to drive growth.

The art of bian lian is that the audience cannot observe the actions causing the face-changing, so that what lies behind the mask cannot be observed. The problem for the CCP today — a half century after Nixon’s historic opening to Beijing — is that, like an aging actor missing his cues, the trick no longer astonishes.

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Source: Chinese Communist Party Masks Growing Troubles | National Review