What is happening in China – a power struggle or the beginning of a global economic meltdown?

It seems that the situation in China has become more complex, with indications warning of a crisis of “bubbles” in the real estate market, and with the injection of uncovered funds on a large scale, and the expansion of the scope of granting loans in recent years, similar to what happened in the United States in 2008

This is in addition to the rumors about the power struggle in China between Chinese President Xi Jinping, who seeks to disengage China from the United States of America and make it a leading power in the world, and a group whose interests are linked to economic cooperation with the United States of America, and thus represents the junior partner to Washington

China, like the United States, the European Union and Japan, has resorted to large-scale uncovered fund injections and expanded lending in recent years in an effort to stimulate demand and thus avoid a new Great Depression, Nazarov said. These measures, as in the West, created a number of “bubbles”, including in the real estate market.. Many homes were built by companies using loans, while ordinary Chinese people bought many of these apartments at inflated prices and with loans

A wave of bankruptcies and collapse in global markets
The situation around Evergrande Real Estate reflects not only the crisis in the real estate sector, which accounts for 30% of China’s GDP, but also in the entire Chinese economy, which has been dependent for its growth in recent years on the injection of loans.. Evergrande, the largest Chinese company in the field of real estate development, is heading towards bankruptcy at an accelerating pace, which may lead to a wave of bankruptcies and collapse in global markets. The company’s total debts amount to 305 billion dollars, which is close to the annual GDP of a country the size of Egypt.. In an effort to avoid default, Evergrande said it plans to sell its stake in Shengjing Bank for $1.5 billion and use the money to pay off debt

Threats to the middle class in China
The Russian political analyst continued, “The evergrand bankruptcy may lead to a collapse in real estate prices and the collapse of a number of other companies in this industry.” However, the most important thing is that it will spread panic in the stock exchanges, which may lead to a decline in the shares of most Chinese companies and the bankruptcy of many of them. A series of major corporate bankruptcies could also halt the country’s financial system, as happened with the collapse of Lehman Brothers, in the United States of America, in 2008. The danger is that a large part of the Chinese middle class invests its savings in stocks, and it will lead to a collapse The stock market automatically plunged into a severe social and political crisis

Watch out for a “tsunami” in all global stock markets
This, given the size of the Chinese economy, is likely to cause a tsunami of all global stock markets, and could lead to a wave of panic and bankruptcy worldwide. The world’s central banks will then have no choice but to print tens or hundreds of trillions of extra cash to prop up markets and banks, which will eventually lead to global hyperinflation

The situation will be exacerbated by the financial collapse of China (the world’s main manufacturer), which is likely to significantly reduce the production and export of goods to world markets

Struggle within the Chinese government
Nazarov believes that there is another crack in this situation, which the well-known Russian expert on China affairs, Nikolai Vavilov, draws attention to is a conflict within the Chinese government between Chinese President Xi Jinping, who seeks to disengage China from the United States of America, And making it a leading power in the world, and among a group whose interests are linked to economic cooperation with the United States of America, and thus represents Washington’s junior partner. This group is fueled, of course, by companies that make money from trade with the United States, as well as companies that have benefited from inflating credit bubbles, including some of the largest companies in the real estate sector

Doubts about America’s subversive role in China
China also suffers from an acute shortage of coal and electricity, while more than half of the provinces, including the capital, have imposed restrictions on electricity supply, and so far the reason for this is still unknown, but in light of the high pace of escalation and the power struggle, one The narratives are the involvement of pro-American groups in sabotage operations that cause this, with the aim of stirring public opinion against the authority

The Chinese authorities are walking the fine rope
China’s central bank could print enough uncovered money to bail out Evergrande, however, according to Nikolai Vavilov, the bankruptcy of this company would deal a blow to opponents, Xi Jinping, and therefore, most likely, the authorities would go to bankrupt the company and later nationalize it

However, there are doubts about the ability of the Chinese authorities to walk the thin line between preventing the start of panic and mass bankruptcy, and ensuring the task of consolidating power in the hands of the political forces that prepare the country for the inevitable confrontation with the United States of America

In any case, the global economic situation has never been on the brink as it is now.. The situation in China is very dangerous, and could lead to the collapse of the current global economic order

Source: (Asia Middle East Forum + Agencies)