The Chinese Communist Party (CCP) held its 20th Congress from 16-22 October. Xi Jinping, secretary general of the CCP, has for all intents and purposes consolidated his hold on power.

Within this conclave of Chinese political power, the 96 million-strong party determined five key policy planks in a Work Report that will guide China’s short-medium-term developments. These core policies outline that Zero COVID-19 will remain the country’s primary means of fighting this disease; China will have to learn to live with slower economic growth; Beijing reserves the right to use force to reunify with Taiwan; the Belt and Road Initiative (BRI) will be scaled back; and China’s entering a stage of development where the people need to be more in sync with its leadership.

Reading between the lines, as one often must when looking at dictatorships, means that the international community needs to prepare for a smaller Chinese economy. The reshoring of Western enterprises from China to elsewhere will have profound socio-economic impacts on the future of the Chinese state. So will the disruptive on-again, off-again lockdowns of industrial centres due to COVID-19 outbreaks.

A smaller Chinese economy will reduce, not increase, the likelihood of a forceful reunification with Taiwan. Invading a country is an expensive exercise. Taiwan has had 75 years to prepare for an invasion from the Chinese mainland, a far longer time than Ukraine had to prepare for a Russian invasion. Unless the People’s Liberation Army (PLA) brings nuclear weapons in early in any such assault, possibly in a series of Electromagnetic Pulse (EMP) bursts around the island state to render Taiwan’s defences useless, a conventional Chinese air and amphibious attack seems unlikely in the foreseeable future.

The Belt and Road Initiative (BRI) was an interesting strategic development for China. Creating a series of road, rail, and pipeline networks connecting resource-rich areas of Africa, the Middle East, and Central Asia overland to China was predicated on being able to prop up, or otherwise support, mercurial and opportunistic regimes that lay along this Chinese-built network.

Containing local complex political factors is something that no power with imperial pretensions is good at doing. For all their noble intentions, Ivy league scholars, and wealth of power, the Americans did not achieve this in Vietnam, Afghanistan, or Iraq. It is unlikely that Beijing has better inside knowledge of local politics or even the will to use kinetic force to impose itself on key gateway states such as Ethiopia, Pakistan, or Myanmar. If China cannot protect its critical BRI infrastructure without garrisoning it or bribing local officials, it will have a problem should local politics turn against Beijing.

China is going through a significant economic ruction separate from its problem of fleeing Western investment and manufacturing. The Ponzi scheme that was China’s property market is teetering on the brink. Chinese banks that had been roped into this crisis are now also vulnerable to collapse. While Chairman Xi may be able to kick the can down the road of this twin crisis for a little while, 2023 is looming as a year where something fundamental is likely to break. It is, therefore, no wonder that the CCP seems content with the Work Report’s suggestion that during a time of potential “black swan” events, the people of China need to be even more closely aligned with Xi.

Before celebrating the potential collapse of the CCP’s experiment with autocratic capitalism, or at least its strategic neutering, there are two likely scenarios that must be considered. Both will affect the West and daily life in the advanced economies.

For the West, reshoring from China will come at a cost to consumers, though it will make the West less vulnerable to Chinese politics and strategic pressures. In the short term, moving investment and manufacturing out of China will increase prices for manufactured goods and disrupt established Chinese-based supply chains. As a result, China might be weakened, poorer, and the CCP less stable, but goods will be more expensive. Once new bases for manufacturing and supply chains are established, the worst of this pain will diminish, but this transition will take years.

Second, if the CCP fails to successfully transform China from a massive engine of global economic manufacture to something much smaller, this brittle system may collapse. If this party were to fragment into warring factions, the internal bloodletting would be epic, if Chinese history is anything to go by. Waves of Chinese refugees fleeing violence would create complete dysfunction in Asia and beyond.

In either scenario, the outlook is grim because, for every calamity that befalls a large geopolitical unit such as China, multiple black swan events can bloom beneath it, leading to a general global, if not civilisational, malaise. It is perhaps no surprise then that cooler heads in Beijing and Washington are trying to work out a way in which China can be afforded a softer landing. But for that to occur, the CCP may need to readjust its behaviour toward the United States and the West. Will Xi be willing to pay this price, including renouncing force as a path toward reunification with Taiwan? This all depends on both Chinese and American negotiators to see their mutual survival in the same way. While hawkish language governs strategic dialogue, Sino-American cooperation seems a far-off country.

Dr John Bruni is Founder & CEO of South Australian geopolitical think tank, SAGE International. He is also a regular commentator on international relations for FIVEaa’s Evenings with Matthew Pantelis, and host of STRATEGIKON & The Focus podcasts. SAGE International is an Adelaide-based, independent, privately operated NFP geopolitical think-tank and consultancy estd. in 2008. Areas of expertise include Indo-Pacific strategy, the Middle East, and North Africa (MENA) region, defence procurement, Australian defence & security and global maritime security and technological trends.

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