Why a STAGNANT China is More Dangerous Than a Rising One (The End of the Chinese Dream)

Imagine for a second that it's the year 2050. You're walking through the streets of a tier three city in China, maybe somewhere in the northeast rust belt like Hang. The sky is that familiar shade of industrial gray. But something is different. It's quiet. Too quiet. You

pass a massive residential complex, one of those 30story concrete behemoths built during the boom years. It looks like a tombstone. Half the windows are dark. The other half are occupied by people over the age of 70. There are no children playing in the courtyards. The schools have been converted into nursing

homes. The factories that used to churn out cheap electronics for the American consumer are silent. Their machinery rusting because there simply aren't enough young bodies to run them. For the last 40 years, the world has been obsessed with the rise of China. We've

been told that it's inevitable. The dragon is waking up. The 21st century belongs to Beijing. We worried about their aircraft carriers, their AI dominance, and their economic eclipse of the United States. But while we were all watching the skyline rise, we missed the termites eating the foundation. What if

I told you the Chinese dream isn't being killed by American sanctions or a war over Taiwan, but by simple, brutal arithmetic? What if the scary story isn't that China takes over the world, but that China collapses in on itself and in its panic threatens to take the

rest of us down with it? We are watching the slow motion car crash of a superpower. A stagnant China isn't just a tragedy for them. It's a time bomb for everyone. From a demographic cliff that makes the Great Depression look like a picnic to a

real estate Ponzi scheme worth $52 trillion, the cracks are spreading fast. Buckle up. We're going to dissect exactly why the party is over. One, the demographic time bomb. Let's start with the absolute mother of all problems.

This isn't a political opinion. It isn't western propaganda. It is cold, hard biological math. To understand why China is facing an existential crisis, we have to go back in time. The year is 1980. The Chinese Communist Party, CCP,

terrified of Malthusian overpopulation, basically the idea that too many mouths to feed would lead to starvation, implements the one child policy. At the time, they thought they were playing 4D chess. They looked at the numbers and said, "Hey, if we stop people from

having kids, we can focus all our resources on economic growth." And strictly speaking, for about 30 years, it kind of worked. It created what economists call a demographic dividend. You had a massive workforce with very few dependents, children, to take care

of. That meant high savings, cheap labor, and the explosive growth we saw in the '90s and 2000s. But here is the dark humor of centrally planning an economy. Biology always collects the debt. By forcibly stopping a generation from being born, China created an

inverted pyramid. Today, we are seeing the rise of the 4:1 problem. This is the nightmare scenario where one working age adult is expected to support two aging parents and four aging grandparents. Just imagine that for a second. Imagine

you're a 25-year-old guy in Shanghai. You're trying to build a career, maybe buy an apartment, which spoiler alert for point number two, you can't afford, and suddenly you realize that you are the sole financial safety net for six elderly people. There are no siblings to

share the burden, no cousins, just you. The scale of this is mind-boggling. According to data from the National Bureau of Statistics of China, the country's population officially began to shrink in 2022, dropping by roughly

850,000 people. That was the first time since the Great Famine of 1961. In 2023, it accelerated, dropping by over 2 million. Okay, you might say. So, there are fewer people, less traffic, right? Wrong. It's

catastrophic. A shrinking population destroys the economic model. China was built on cheap labor. For decades, China was the world's factory because they could throw millions of bodies at any manufacturing problem. Need 100,000 workers to assemble iPhones done in a

week. But that labor pool is drying up. The number of working age people in China peaked back in 2014 and has been falling ever since. By 2050, China is projected to lose roughly 200 million working age adults. That is like losing

the entire population of Brazil from your workforce. Poof, gone. Now, let's sprinkle in some edgy commentary on the social engineering aspect. Because of the cultural preference for boys, millions of female fetuses were aborted or abandoned during the one child era.

This has led to a gender imbalance where there are roughly 30 to 35 million more men than women. These men are sociologically referred to as guangun or bare branches. They are biological dead ends. They will never marry, never have kids, and never carry on the family

line. This creates a volatile layer of frustrated, lonely military-age males with no stake in the future. Historically, having millions of surplus men is a recipe for social instability or war. But we'll get to the war part later. The government sees this

happening and is now desperately trying to reverse course. In 2016, they allowed two children. In 2021, they allowed three. They are literally texting citizens telling them to have sex for the country. But it's not working. The birth rate in 2023 hit a record low of

6.39 births per 1,000 people. That is lower than Japan. It's lower than almost anywhere on Earth. Why? Because you can't just turn human reproduction on and off like a light switch. You spent 40 years drilling into people's heads that one is enough. And you created a

society that is hyperco competitive and incredibly expensive. Young people today look at the cost of raising a child in Beijing or Shenzhen, which relative to income is actually higher than in New York or London, and they say, "No thanks." Here is the fun fact comparison

that should keep you up at night. Japan. Everyone likes to compare China's stagnation to Japan's lost decades starting in the 1990s, but there is a critical difference. When Japan's bubble burst and their population started to age, they were

already rich. Their GDP per capita was on par with the United States. They had a fully developed social safety net. China is getting old before it gets rich. China's GDP per capita is around $12,700 as of 2023.

That is roughly where the US was in 1980. Adjusted for inflation, it's still significantly lower than developed nations. They don't have the wealth to pay for the massive wave of pensions and healthare costs coming their way. The Chinese Academy of Social Sciences

predicted that the state pension fund will run completely dry by 2035. That is basically tomorrow in demographic terms. What happens when hundreds of millions of elderly people stop getting their checks? What happens when the single children can't support them? The state

will have to print money to bail out the pension system, which causes inflation, which kills the purchasing power of the young, which makes them even less likely to have kids. It is a death spiral. And don't forget the little emperor syndrome. The one child policy created a generation of children who were the sole

focus of their families. They were pampered, pressured, and poured into. Now, those little emperors are adults, and they are expected to work the grueling 996 schedule, 9:00 a.m. to 9:00 p.m. 6 days a week in a slowing economy.

They are burning out. They aren't the docsile, endless labor supply their parents were. So, to recap, section one, the engine of the Chinese miracle, human capital, is broken. The demographics ensure that China's economy must shrink. There is no magical AI robot that can

replace the consumption and innovation of 200 million missing young people. This sets the stage for everything else we're going to talk about. You can't build a dynamic future when your country is turning into the world's largest nursing home. But if you think the people problem is bad, wait until you

see how they've been paying for everything. Spoiler, it's a giant scheme involving empty apartments and ghost cities. Two, the real estate Ponzi scheme. Now, let's talk about money. If you want to understand why the Chinese economy is currently on life support,

you don't need to look at the stock market or trade tariffs. You need to look at concrete. Imagine you walk into a dealership to buy a car. The salesman points to an empty parking spot and says, "That'll be $50,000. The car doesn't exist yet, but if you pay me the full price right now, I

promise to build it in 2 years." You'd laugh and walk out, right? Well, in China, this is how almost everyone bought a home for the last 20 years. It's called the pre-sales model, and it is the fuel for the largest asset bubble in human history. For decades, the

Chinese government and its citizens made a silent pact. The party stays in power, and in exchange, housing prices always go up, and they did. Real estate became the country's national religion. Because the Chinese stock market is notoriously

like a casino, rigged and volatile, and capital controls make it illegal to move large amounts of money out of the country, real estate became the only safe place to store wealth. The result, Chinese households hold roughly 70% of their wealth in property. In the US,

it's closer to 30%. This insatiable demand created a monster. Developers like Everrand and Country Garden became the largest in the world by playing a dangerous game. They would take your money for an unbuilt apartment, use that cash to buy more

land, take out massive loans using that land as collateral, and start the cycle all over again. They were effectively running a Ponzi scheme disguised as a construction business. At its peak, the Chinese real estate sector accounted for roughly 30% of the country's entire GDP.

To put that in perspective, during the US housing bubble before the 2008 crash, it was about 18%. The total value of the Chinese real estate market was estimated to be around $52 trillion. That is more than the US bond market,

stock market, and real estate market combined at certain points in history. But in August 2020, the music stopped. Xiinping realizing the debt was getting out of control introduced the three red lines policy. It was a strict set of

financial rules designed to force developers to delever. The idea was to gently deflate the bubble. Instead, they popped it with a needle the size of the Shanghai Tower. Cut off from easy credit, the developers choked. They couldn't pay their debts, and more importantly, they couldn't finish the

apartments people had already paid for. The poster child for this disaster is Everrand, which collapsed under a staggering $300 billion in liabilities. Its founder, Huikayan, once the richest man in Asia, is now under criminal measures, and the company has been

ordered to liquidate. But the real tragedy isn't the billionaires losing money. It's the Lanu, the rotten tail buildings. Picture this. You're a young couple who poured your life savings plus money borrowed from your parents into a down payment for a condo in Junga.

You're paying a mortgage every month. But when you go to visit your new home, you find a skeletal concrete shell. There are no windows, no electricity, no water. The cranes haven't moved in 2 years. This is the reality for millions of people. In a desperate act of

protest, some families have actually moved into these unfinished shells, living without heat or running water on the 20th floor. climbing stairs in the dark just because they have nowhere else to go and are still paying the bank for the privilege. And the scale of the waste is nauseating. Estimates vary, but

some economists calculate there are between 65 million and 90 million empty apartment units across China. That is enough to house the entire population of France, Germany, or the UK with room to spare. These are the infamous ghost cities. Miles and miles of high-rise

towers where the only residents are wind and dust. This collapse is the single most dangerous factor for the CCP. When 70% of your people's wealth is tied up in an asset that is rapidly losing value, or worse, might never be finished. You have broken the social

contract. You have erased the retirement savings of an entire generation. The government is now trying everything to stop the bleeding, lowering interest rates, removing purchase restrictions, pushing banks to lend, but it's pushing on a string. Confidence is gone. Nobody wants to catch a falling knife. And this

real estate black hole is sucking the life out of the rest of the economy, leading directly to the phenomenon we're going to discuss next. A phenomenon where the youth look at this broken system and simply say, "I quit." Three, lying flat and letting it rot. If the

real estate crisis is the hardware failure of the Chinese economy, what we're about to discuss is the software crash. It is a psychological rebellion that is terrifying the Communist Party more than any American aircraft carrier ever could. To understand this, you have

to learn three new Chinese words. If you remember nothing else from this video, remember these. The first is nuan involution. The second is Tangping lying flat. The third and most dangerous is banan letting it rot. Let's set the

scene. Imagine you are a 22-year-old university graduate in Beijing. You have spent your entire conscious life in a pressure cooker. Since kindergarten, your parents and teachers have drilled into you that you must study 12 hours a day. You survived the GACO, the most brutal college entrance exam on Earth,

where a single point can determine if you become a CEO or a factory worker. You did everything right. You got the degree. You obeyed the rules. You enter the job market expecting the Chinese dream you were promised. Instead, you're handed a delivery uniform. Welcome to

Nuan or involution. The sociological term originally described a process where a population grows but output doesn't leading to diminishing returns. In modern Chinese slang, it describes a rat race that has spun out of control. Think of it like a

movie theater. Everyone is sitting down watching the screen. Suddenly, the guy in the front row stands up to get a better view. To see past him, the people in the second row have to stand up. Eventually, everyone in the entire theater is standing up. Nobody is seeing

the movie any better than before. But now everyone is exhausted. That is the life of a young Chinese worker. He worked the infamous 996 schedule. 9:00 a.m. to 9:00 p.m. 6 days a week. Tech billionaires like Jack Mah called this a

blessing. But for the average worker, it's a death march. And for what? To buy an apartment that costs 40 times your annual salary to pay for a child you can't afford. So, the youth did something the party didn't expect. They sat down.

This is Tangping lying flat. It started with a viral post in 2021 by a guy named Lu Hua Jong who described living on $60 a month, working odd jobs only when necessary, and spending the rest of his time reading and sleeping. He wrote,

"Lying flat is my wise movement." It wasn't just laziness. It was a general strike. It was a passive aggressive middle finger to the state. Young people stopped buying clothes. They stopped dating. They stopped striving. They decided that if the game

is rigged, the only winning move is not to play. The government freaked out. State media called lying flat shameful. Internet sensors scrubbed the term from social media. They need these kids to work, consume, and buy those unfinished condos to keep the GDP growing. But then

things got darker. Lying flat evolved into Banan. Let it rot. If lying flat is passive resistance, let it rot is nihilistic surrender. It comes from basketball terminology. If a team is losing so badly that there is no chance of winning, they stop trying. They put

in the benchwarmers. They just let the clock run out. It's garbage time. Young people in China are looking at the economy and saying, "We're in garbage time." And who can blame them? In the summer of 2023, youth unemployment, ages 16 to 24, hit a record 21.3%.

That means 1 in five young people couldn't find a job. And that's the official number. A professor at PKing University estimated the real number might be closer to 46.5% if you count the millions who have just given up looking. The situation got so

embarrassing that in August 2023, the Chinese government simply stopped publishing the data. That's right. They didn't fix the problem. They just deleted the spreadsheet. They eventually brought the data back months later with a new methodology that conveniently

excluded students, making the numbers look better. This has birthed a tragic new social class. Full-time children. These are college graduates in their 20s who move back in with their parents. But they don't just live there. They are hired by their parents to be children.

The parents pay them a monthly salary to clean the house, cook, and maybe dance for grandma. It sounds funny until you realize it's a desperate coping mechanism for a generation with nowhere to go. In 2023, we saw a viral trend of zombie style graduation photos. Instead

of throwing their caps in the air and smiling, graduates posted photos of themselves draped over railings, face down on the ground, or hanging limply from chairs looking like corpses. The caption, "I am more dead than alive." This productivity void is a killer for a

stagnating economy. Innovation requires hunger. It requires ambition. You cannot force people to be innovative at gunpoint. If the smartest minds in your country are deciding to let it rot because they see no future, your tech sector dies. Your consumption economy

dies. And the government's response has been tonedeaf on a historic scale. Xiinping, who grew up during the cultural revolution and lived in a cave house in the countryside, told the youth they need to eat bitterness. Chiku, this is an idiom meaning to endure hardship.

He essentially told a generation of digital natives facing a complex structural economic collapse to suck it up and go work in the fields like he did in the 1960s. The propaganda machine started pushing stories about college graduates who found happiness collecting garbage or selling tofu on the street.

The youth aren't buying it. They look at the corruption, the inequality, the censorship, and the crushing cost of living, and they realize that eating bitterness only benefits the party elites. This creates a massive psychological drag on the economy. You can print money, sort of, and you can

build bridges, but you cannot print hope. A generation that has let it rot is a generation that won't start businesses, won't take risks, and certainly won't have three children to save the demographics. This internal rot leads us directly to the next pillar of the collapse. We've talked about the

people and the mindset. Now we have to talk about the institutions that run the country's daily life. While the kids are lying flat, the local governments are drowning. Four, the hidden mountain of local debt. If you think the real estate

crisis is bad, wait until you meet its evil twin. This is the financial black hole that keeps international economists awake at night sweating through their sheets. It's called LGFV debt and it is arguably the biggest subprime crisis the world has ever seen. Let's start with a

simple question. How does a city go bankrupt in a communist country? In most normal countries, cities collect taxes, property tax, sales tax, and use that money to pave roads and pay police officers. If they run out of money, they cut services or raise taxes. In China,

the system is designed with a fatal flaw. The central government in Beijing is like a strict parent who takes 80% of the household income, but tells the kids, the local governments, you're responsible for buying your own food, clothes, and paying for school. Beijing takes the lion's share of tax revenue,

but forces local governments to pay for the vast majority of public services, healthare, education, infrastructure. For years, there was a massive gap between what cities earned and what they had to spend. So, how did they survive? They cheated since Beijing made it

illegal for local governments to borrow money directly from banks to prevent them from overspending. Ironic, right? The local officials got creative. They created local government financing vehicles, LGFBs. These are essentially shell companies. They look like corporations, but they are owned by the

city. Here is the scam. The city government would take a piece of public land and gift it to the LGFV. The LGFV would then walk into a bank and say, "Look at this valuable land I own. Give me a billion dollar loan." The bank, knowing the government was behind it,

would say, "Sure." The LGF would take that billion dollars and build bridges, subways, massive convention centers, and shiny new districts. This created GDP growth, which made the local officials look good to Beijing, which got them promoted. It was a perfect machine. But

here is the catch. The LGFVs don't make money. They built infrastructure that often generates zero return. A six-lane highway in a ghost city doesn't pay tolls. A massive museum with no visitors doesn't sell tickets. For years, this didn't matter because land prices kept

going up. C-section 2. The LGF could just sell more land or borrow more money against the rising value of their assets to pay off the old loans. It was a classic Ponzi scheme, using one credit card to pay off another. But remember the three red lines. Remember the real

estate crash? When the property bubble popped, land sales, which accounted for roughly 40% of local government revenue, collapsed. Suddenly, the land the LGFS were using as collateral was worth a fraction of its paper value. The bank stopped lending. The music stopped. Now,

we're staring at a debt mountain that is truly incomprehensible. The IMF estimates that LGF debt is somewhere around $9 trillion. Other estimates put it as high as $13 trillion. To put that in perspective, $13 trillion is roughly the entire GDP of the Euro zone. It is

nearly half of the United States national debt accumulated in just a few years, hidden off the books with almost no revenue to pay it back. And this isn't just numbers on a screen. This is causing a breakdown of civil society in real time. Across China, we are seeing

things that shouldn't happen in a modern superpower. In Hangang, a city in the northeast, the government officially entered fiscal restructuring, a nice way of saying bankruptcy. They stopped hiring. They turned off street lights to save electricity. In Tanzhin, one of

China's richest cities, there were reports of bus drivers not getting paid for months. In Guijaou Province, the government publicly admitted, "It is impossible for us to pay our debts, effectively begging Beijing for a bailout." Teachers and civil servants in wealthy

provinces like Jang Su and Jaang have been asked to return bonuses they were paid in previous years. Imagine your boss coming to you and saying, "Hey, remember that Christmas bonus from 2021? Yeah, I need that back." This is the nightmare scenario for the CCP. The

Communist Party's legitimacy rests on its ability to provide stability and services. When the garbage doesn't get picked up, when the buses stop running, and when the police don't get paid, the control starts to slip. Beijing is currently playing a shell game called swaps, allowing local governments to

trade this highinterest shadow debt for lower interest official government bonds. But this is just moving the debt from the left pocket to the right pocket. It doesn't solve the problem that the money has already been spent on useless concrete. This massive debt burden means local governments are

paralyzed. They cannot spend money to stimulate the economy. They cannot support the social safety net needed for the aging population. Section 1. They are zombie governments existing only to service the interest on their loans. This creates a terrifying deflationary

pressure. When the government stops spending, construction companies go bust. When construction companies go bust, workers lose jobs. When workers lose jobs, they stop spending. And that brings us to the next critical failure point. The one thing that was supposed

to save China, the legendary Chinese consumer, is refusing to show up. Five, the consumption trap. We have talked about the dying population, the collapsing real estate market, the nihilistic youth, and the bankrupt cities. Now, we arrive at the one thing

that economists said would save the day, the Chinese consumer. For 20 years, Wall Street and Beijing have been singing the same song. Don't worry about the factories slowing down. We are pivoting. We are transforming from an export-led economy making cheap

stuff for America to a consumption-led economy. Chinese people buying stuff for themselves. It sounds great on paper. You have 1.4 billion people. If every one of them buys an extra cup of coffee a week or a new pair of sneakers once a year, you have an infinite money glitch.

The rise of the Chinese middle class was supposed to be the engine of global growth for the next half century. But there is a massive problem. The Chinese consumer has gone on strike. Welcome to the consumption trap. To understand why this is happening, you have to look at the structure of the Chinese economy. In

the United States, household consumption makes up roughly 68% of GDP. We love to spend money. If we have $10, we spend $11. We are the consumers of last resort for the entire planet. In China, household consumption is stuck at a

measly 38% to 40% of GDP. That is shockingly low. It is lower than the global average. It is lower than most developing nations. Why? Why are Chinese people saving money like doomsday preppers instead of buying Teslas and

Gucci bags? It's not because they don't want nice things. It's because the Chinese economic system forces them to save out of pure terror. Let's go back to the second person perspective. Imagine you're a father in a tier 2 city like Changdu. You have a

decent job. You have some money in the bank. But you look at your life and you see the three big mountains, Sanor Dashan, looming over you. One, housing. We already covered this. You need to save for decades just to afford a down

payment on a concrete box that might never be finished. Two, education. The competition is so fierce that you have to spend a fortune on tutors and cram schools. Even with the government trying to ban them, the black market for tutors is booming. Three, health care. This is

the big one. China's public health care system is, let's call it, basic. If you get seriously ill, cancer, a major surgery, the coverage is minimal. There are horror stories of families having to bring suitcases of cash to the hospital before a doctor will operate. Because

the social safety net is so weak, you cannot spend your paycheck. You have to hoard it. You are one bad diagnosis or one lost job away from ruin. This is called precautionary savings. During the COVID lockdowns, when the government welded people into their apartments and

shut down the economy, the psychological scar was deep. When the lockdowns finally ended in late 2022, Western economists predicted revenge spending. They thought Chinese people would burst out of their homes and spend like drunken sailors just like Americans did.

It didn't happen. Instead, we got revenge saving. In 2023, Chinese household deposits surged by $2.5 trillion. People looked at the instability, the crackdowns, and the youth unemployment, and they shoved their money under the mattress. This creates a terrifying

economic phenomenon, deflation. You usually hear about inflation, prices going up, and that's bad. But deflation, prices going down, is actually much, much worse for an economy like China's. Here is the psychology of deflation.

Imagine you want to buy a new refrigerator. You walk into the store and see it cost 3,000, but you notice that last month it was 3,500 and you hear rumors that next month it might be 2,500. What do you do? You wait. You don't buy it. When

everyone waits, the factory sells fewer fridges. So they cut the price again, but they also cut wages or fireworkers. Now you have less money, so you wait even longer. Prices keep falling, but nobody buys anything because they are waiting for the bottom. This is the

deflationary spiral, and it is the widowmaker of economies. It is exactly what killed Japan's growth in the '90s. China is teetering on the edge of this abyss right now. Consumer prices have been flirting with negative territory throughout 2023 and 2024. And look at

what people are buying. The era of premiumization where everyone wanted upgraded luxury goods is dead. We're now in the era of ping. Ping tiss. Ping tea translates roughly to flat replacement or affordable alternative. It's the

trend of ditching brand names for generic cheap versions. Instead of Starbucks, people are going to Luckin coffee or Cotty coffee where a cup costs 9.9 R&B about $1.40. 40. Instead of buying Estee Lauder, women are buying

domestic budget brands. Instead of shopping at high-end malls, the hottest app in China isn't JD.com or T- Mall anymore. It's Pindu Duo, the parent company of Teu. Pindu Duo is famous for relentless dirt cheap discounting. When the fastest growing company in your

country is the dollar store, your economy is not upgrading, it is downgrading. This consumption trap is a political nightmare for Cinping. His entire strategy for the next 10 years, labeled dual circulation, relies on domestic consumption, powering the

economy so China doesn't have to rely on the West. But you cannot mandate consumption. You can order a factory to build 10,000 tons of steel. You can order a bank to issue a loan, but you cannot order a citizen to go out to dinner. You cannot force a family to take a vacation when they're worried

about their pension. The government is trying everything except the one thing that would work. Direct cash transfers. In the US during CO, the government sent stimulus checks directly to people. It caused inflation, sure, but it kept consumption alive. In China, the CCP

refuses to give cash to households. They view it as welferism that breeds laziness. Instead, they pump money into the supply side. Factories just infrastructure. So you have factories churning out more electric vehicles, more solar panels, and more batteries

than anyone needs. But nobody in China has the money to buy them. This creates a massive surplus of goods. And where do those goods go? They get dumped on the global market at rock bottom prices. This terrifies Europe and the US, leading to tariffs and trade wars, which

we will get to later. So the consumption trap locks China into a corner. They need their people to spend to become a modern high-income nation. But their people are too scared, too old, and too debtridden to open their wallets. And just when you think, well, at least the

private tech companies can innovate their way out of this. You remember? Oh, wait. The government smash them in the face with a hammer. Six. Crushing the private sector. Let's play a quick game of Where's Waldo? But with billionaires. Remember Jackmar, the charismatic

English teacher turned tycoon who founded Alibaba? He was the face of modern China. He was the Chinese Steve Jobs. He starred in kung fu movies, danced like Michael Jackson at company parties, and told the world that China was open for business. Now ask yourself,

when was the last time you heard him speak? When was the last time he gave a keynote address or a fiery interview? Exactly. The story of Jack Maher and the systematic destruction of China's tech elite is the perfect case study for why the Chinese economy has lost its soul.

It is the story of a government that decided it would rather be king of the ashes than share power with the merchants. To understand the magnitude of this mistake, we have to go back to the golden age. From roughly 2010 to 2020 2020, China was arguably more

innovative than Silicon Valley. WeChat wasn't just a chat app. It was an operating system for life. You could pay taxes, order food, book a divorce appointment, and chat with grandma, all without leaving the app. Alipe revolutionized finance, making credit

cards obsolete before they even took off. Didd Singh crushed Uber at its own game. These companies were the crown jewels. They were proof that China could do more than just copy. It could lead. But on October 24th, 2020, everything

changed. Jack Mahar took the stage at the Bun Summit in Shanghai. In the audience were the most powerful regulators and bankers in China. And Jack, feeling invincible, decided to speak his mind. He criticized the Chinese banking system, calling it a

porn shop mentality. He said the regulators were stifling innovation. He essentially told the old men in suits that they didn't understand the future. It was the most expensive speech in history. Within 48 hours, the hammer came down.

The planned IPO of Ant Group, Alibaba's fintech arm, which was set to be the largest stock market listing in human history, 37 billion, was suspended on the personal orders of Xiinping. Then Jack vanished. For months, nobody

knew where he was. Rumors flew. Was he in prison? Was he dead? He eventually resurfaced months later in a bizarre low-resolution video, looking pale and subdued, talking about how much he loves rural education. He has since been spotted painting in Tokyo and teaching

at a university, effectively retired. But the CCP didn't stop with Jack. They went on a rampage against the entire private sector. This is known as the regulatory storm. Muan, the food delivery giant was fined $530 million

for antitrust violations after its CEO posted a poem on social media that was interpreted as a subtle dig at the emperor. Di was punished right after its US IPO. The government banned the app from app stores, citing data security,

wiping out billions in shareholder value overnight. the tutoring sector. In one afternoon in July 2021, the government effectively illegalized the entire for-profit private tutoring industry. Companies like New Oriental. This was a

100 billion industry vaporized overnight. Hundreds of thousands of people lost their jobs. Why? Why would a government take a sledgehammer to its most successful taxpaying job creating companies? It boils down to one phrase.

Gujin Mui Gujin Mui. This translates to the state advances, the private sector retreats. Under Siginping, the priority is not maximum economic growth. It is maximum control. The party looked at these tech giants and saw a threat.

These companies held the data of 1.4 billion people. They controlled the flow of money. They had more influence over the daily lives of citizens than the local party secretary did. to an authoritarian regime that is terrifying. So they decided to break them. They

introduced the concept of golden shares. This is a brilliant mafia style tactic where the government buys a tiny stake in a company, usually just 1%, but that 1% comes with a special board seat that gives them veto power over major

business decisions. Imagine if the US government bought 1% of Apple and then told Tim Cook, "No, you can't launch that iPhone. It's not consistent with socialist core values." The result of this crackdown is a chilling effect that has frozen the blood of the economy. If

you are a young, brilliant entrepreneur in China today, what is your incentive? If you fail, you go broke. If you succeed, really succeed, the government will come for you. They will break up your company, fine you into oblivion, or make you disappear for a while to study

thought. Look at Bowan. He was the star dealmaker of China's tech world, the banker who made everything happen. In February 2023, he just went missing. His company, China

Renaissance, said they were unable to contact him. Later, it was revealed he was cooperating in an investigation. When the guy who knows where all the money is buried disappears, the money gets scared. The era of the celebrity CEO in China is dead. The new generation

of founders are keeping their heads down. They are focusing on hard tech that the government likes, semiconductors, AI, batteries, and staying away from consumer internet platforms. They're prioritizing political correctness over profit. But you cannot centrally plan innovation.

You cannot order a Steve Jobs or an Elon Musk into existence. Innovation requires messiness. It requires the freedom to break rules and challenge the status quo. Exactly the things Jack Mahar was punished for. The private sector contributes 60% of China's GDP, 70% of

innovation, and 80% of urban employment. By crushing the spirit of the private entrepreneur, the CCP has strangled the goose that laid the golden egg. They have signaled to the world that in China, property rights are just a suggestion and your business belongs to

the party whenever they decide they want it. And the wealthy have heard that message loud and clear. They aren't just retiring, they are packing their bags. Seven. Run rabbit run. If you want to

know what the smartest money in China thinks about the future, don't listen to what they say on state TV. watch where their feet go. There is a new field of study in China. It's not taught in universities, but it is whispered about in every exclusive dinner club in

Shanghai and Beijing. It's called runu renier. In Chinese, the character run sounds like the English word run. It literally translates to the study of running away. It is the art and science of escaping China with your wealth and your family intact. And right now,

business is booming. According to Henley and Partners, a firm that tracks the migration of the wealthy, China lost 13,500 high- netw worth individuals, millionaires, in 2023 alone. That is the highest number of any country on earth.

They are bleeding rich people faster than Russia, faster than India, faster than anyone. Why are they running? Because the unspoken contract is broken. For decades, the deal was you can make money, but you have no political power.

Now, with the crackdowns we discussed in section 6, the deal has changed to we can take your money and your freedom whenever we feel like it. If you are a Chinese millionaire, you are currently playing a highstakes game of catch me if you can with the Communist Party. Here

is the problem. The Chinese government has strict capital controls. Officially, a citizen is only allowed to transfer $50,000 out of the country per year. Now, imagine you want to buy a $5 million penthouse in Singapore or a townhouse in London. At $50,000 a year,

it would take you 100 years to get the money out legally. So, how do they do it? The methods range from the creative to the desperate. Method one, smurfing. This is the classic technique. You recruit 100 friends, relatives, or

employees. You give each of them $50,000. They all wire it to your overseas account on the same day. It's tedious and the banks are catching on. Their AI systems flag patterns like this instantly now, but it's still the most common way for the upper middle class to bleed money out. Method two, the crypto

underground. Cryptocurrency is officially banned in China. You can't just open a Coinbase account. But the underground market is massive. Rich Chinese meet brokers in back alleys or encrypted chat rooms. They hand over a suitcase of R&B cash or transfer bank

funds domestically. and the broker deposits USDT, Tether into a digital wallet that can be accessed anywhere in the world. It's risky. You might get scammed or arrested, but when the alternative is losing everything to a government seizure, people take the risk. Method three, the art of

laundering. You buy a painting in Beijing for $5 million. You ship it to Hong Kong, which still has looser financial rules. You sell it at an auction in Hong Kong for dollars or pounds. Boom. Your money is now clean and offshore. Method four, the Macau shuffle. For

years, the casinos of Macau were the washing machines of China. You go to a VIP room, buy $10 million in chips using yuan, play a few hands of back, maybe lose a little bit to make it look real, and then cash out the remaining chips in US dollars or Hong Kong dollars. The

government has cracked down hard on this, installing facial recognition and tracking chip movements. But where there is a will, there is a way. Where are they going? Singapore has effectively become the Beijing of the South. Go to a luxury car dealership in Singapore and they are sold out of Rolls-Royces. The

wait lists are months long. Rents in Singapore have skyrocketed because Chinese billionaires are setting up family offices there to park their wealth. They feel safe there. It's Chinese-sp speakaking. It's orderly, but it operates under western rule of law. Japan is another hot spot. It's close.

The property is relatively cheap compared to Shanghai, and the lifestyle is high quality. Tokyo real estate agents are reporting a flood of cash buyers from mainland China buying entire apartment blocks sight unseen. But it's not just the rich who are running. This is the saddest part of Rangu. We're

seeing a massive surge in middle class and workingclass Chinese attempting the Zu Xian walking route. These are people flying to Ecuador, which doesn't require a visa for Chinese citizens, and then walking, literally walking through the Darian Gap Jungle up through Central

America and crossing the US Mexico border. In 2023, the US Border Patrol encountered over 37,000 Chinese nationals crossing the southern border illegally. That is roughly 50 times higher than the number just 2 years prior. Think about the desperation

required for that. These aren't impoverished farmers from the 1800s. Many of these are teachers, small business owners, and office workers. They're selling their apartments, taking a flight to the other side of the world, and risking death in a jungle controlled by cartels just for a chance to deliver

food in New York City or work in a nail salon in LA. They are voting with their feet. And their feet are saying that the Chinese dream is over. When your capital flight is this severe, both human capital and financial capital, investment collapses. You

cannot build a future when everyone is packing their bags. The wealthy are taking the seed corn out of the silo and planting it in someone else's field. And this exodus accelerates the very thing the government fears most, the permanent stagnation of the economy. Which brings

us to the economic theory that explains why China is stuck. Eight, the middle income trap. Okay, put your professor glasses on for a second. We need to talk about the most terrifying chart in development economics, the middle income trap. Here

is the premise. It is actually pretty easy, relatively speaking, for a poor country to become a middle-income country. You take farmers who are making $1 a day. You move them into a factory to sew t-shirts or assemble toys for $10 a day. Productivity explodes. GDP

soarses. Everyone is happy. This is China from 1980 to 2010. But then you hit a wall. Eventually, your workers want higher wages. You aren't the cheapest place to make t-shirts anymore. Companies move to Vietnam, Bangladesh, or India. To keep growing, you have to

level up. You have to stop making toys and start making airplanes, advanced pharmaceuticals, and AI software. You have to move from imitation to innovation. Few countries make this jump. South Korea did it. Taiwan did it. Japan did it. But most countries, they

get stuck. They become Brazil, South Africa, or Mexico. They get just rich enough to have high costs, but not smart enough to dominate high-tech industries. They stagnate for decades. China is hitting this wall hard right now. But wait, you say, China has EVs. They have

Huawei. They have space stations. Yes, they do. But China is a tale of two countries. There is Tier 1 China, Shanghai, Shenzhen, Beijing, which looks like Cyberpunk 2077. It is futuristic, high-tech, and wealthy. Then there is

invisible China, the rural hinterlands where roughly 60% of the population still has their roots. Stanford economist Scott Roelle has done groundbreaking research on this. He found a shocking statistic that the CCP hates. Only about 30% of China's entire

labor force has a high school education. Compare that to countries that successfully escape the middle income trap. When South Korea and Taiwan made the jump to high-income status, nearly 70 to 80% of their labor force had a high school degree. You cannot build a high-tech consumption-based information

economy when nearly 70% of your workers dropped out after middle school. Why is education so low? It goes back to the hooku system, household registration. In China, your rights are tied to your place of birth. If you are born in a rural village but moved to Shanghai to

work in a factory, you are a secondass citizen. You cannot send your kids to Shanghai schools. You have to leave them back in the village with their grandparents, the left behind children. Rural schools are underfunded and terrible. So millions of kids drop out to work. Now that the factories are

leaving or automating, these millions of uneducated workers are unemployable in a modern economy. They can't code Python. They can't design semiconductors. They can only do manual labor. And the manual labor jobs are vanishing. This is the anchor dragging China down. The

government spent trillions building highspeed rail to nowhere, but they refuse to invest in the brains of their rural population. The middle income trap predicts that China's growth will slow down to 1% or 2% or even 0%. It predicts that China will never catch up to the

United States in GDP per capita. It will remain a giant, sluggish, unequal nation where a few elites live in luxury while the masses struggle for scraps. And historically, when an authoritarian regime realizes it can no longer deliver economic growth to its people, it needs

a new source of legitimacy. It needs a distraction. It needs a common enemy. It needs a war. Nine. The Taiwan distraction. If you're a student of history, you know that there is a terrifying pattern that plays out when a great power starts to crumble from the

inside. When the Roman Empire began to rot, emperors launched expensive campaigns to distract the plebeians. When the Argentine Juna faced economic collapse in the 80s, they invaded the Falkland Islands to whip up nationalist fervor. This is the diversionary war

theory. And right now, all the red lights on the dashboard are blinking. China is currently stuck in what political scientists call a peaking power trap. This theory suggests that a rising power is usually cautious because time is on its side. But a power that

has peaked, one that realizes its best days are behind it and its window of opportunity is closing becomes incredibly dangerous. They feel they have to act now or never. This brings us to the most dangerous place on earth, Taiwan. For Xiinping, taking Taiwan

isn't just a strategic goal. It is a religious one. It is the great rejuvenation. It is the only thing that would enshrine him in the history books alongside Mao Sudong. If he can't deliver 10% GDP growth, he must deliver Taiwan. Here is the nightmare scenario.

The year is 2027. The Chinese economy is in a depression. Youth unemployment is 40%. Protests are bubbling up in major cities. The party needs a unifying drug. Suddenly, state media switches to 24/7 coverage of separatist provocations in

Taiwan. The narrative shifts from why can't I find a job to we must defend the motherland. But this isn't just about narratives. It's about the PLA, People's Liberation Army. She has spent billions modernizing the military. They have

built the largest navy in the world by hull count. They have hypersonic missiles. They have the carrier killers. But here is the twist, the dark humor of the situation. The Chinese military might be suffering from the same rot as the real estate sector. In early 2024, a

massive purge swept through the PLA rocket force, the guys in charge of the nukes. Dozens of generals disappeared. US intelligence reports leaked a story that is almost too crazy to believe. Some of the missiles were reportedly filled with water instead of fuel. Other

reports claimed that missile silo lids didn't function properly because of corruption in the construction contracts. This is the classic dictator's dilemma. She wants to fight, but he doesn't know if his gun will actually shoot. However, a weak military might actually make war more likely, not

less. If she believes his generals are lying to him, or if he feels his window is closing before the corruption gets worse, he might gamble on a blockade rather than a full invasion. A blockade is the strangulation strategy. China surrounds Taiwan with ships, cuts off

the internet cables, and dares the US to shoot the first shot. It cripples the global economy overnight. Why does this matter to you sitting in Ohio or Manchester? Because Taiwan is the cork in the bottle. If China takes Taiwan, they break the first island chain. They

gain deep water access to the Pacific Ocean, threatening Hawaii and the US West Coast. The American security guarantee, the promise that keeps Japan, South Korea, and the Philippines safe, evaporates. Nuclear proliferation explodes across Asia. Japan gets a nuke. South Korea

gets a nuke, the world becomes a powder keg. But there is an even bigger reason why Taiwan matters. It's not about geography. It's about a tiny silver square the size of a fingernail. If the Chinese real estate market is the world's biggest bubble, Taiwan is the

world's most critical bottleneck. It produces 90% of the world's most advanced semiconductors. If those factories stop running, either because of a blockade or because they are blown up to prevent capture, the global economy stops instantly. No new iPhones,

no new cars, no new medical devices, no new fighter jets. It would be a global depression that makes 1929 look like a mild recession. And this dependency on chips leads us directly to the next section. Because while China is dreaming of taking Taiwan, the United States has

already launched a war to stop them. A war fought not with missiles but with export controls. 10. The Silicon Curtain. On October 7th, 2022, the United States dropped a nuclear bomb on China. There was no explosion, no

mushroom cloud, just a document released by the Bureau of Industry and Security. But historians might look back on that day as the moment China's rise was officially capitated. This is the story of the Chip war. Here is the simple reality of the 21st century. Computation

is power. Artificial intelligence, hypersonic missiles, quantum computing, surveillance systems, they all run on advanced semiconductors. Specifically, we're talking about chips smaller than 5 nm. To give you an idea of how small that is, a strand of human

hair is about 100,000 nm wide. We are manipulating matter at the atomic level. China consumes roughly 40% of the world's chips, but it produces almost none of the cuttingedge ones. They are addicted to Western technology. For years, the US strategy was, "We will

sell China chips, but we will stay two generations ahead." On October 7th, the Biden administration changed the strategy to China must not advance any further. Period. They implemented a sweeping set of export controls that did three things. One, ban

the chips. Companies like Nvidia were banned from selling their most powerful AI chips, like the H100, to China. Two, ban the machines. You can't make chips without incredibly complex machines called lithography tools. The best ones are made by a single company in the

Netherlands called ASML. The US pressured the Dutch to stop selling these machines to China. Three, ban the people. This was the master stroke. The US forbade US persons, citizens and green card holders from helping Chinese chip factories.

Overnight, hundreds of highlevel engineers, many of them Chinese Americans who are the brains of the Chinese semiconductor industry had to choose. Quit your job immediately or lose your US citizenship. They quit. It was a brain drain of epic proportions.

This created the silicon curtain. China is now furiously trying to build its own domestic supply chain. They are pouring tens of billions into a fund called the big fund. Creative name, right, to subsidize companies like Smick and Huawei. And they have had some small

victories. In late 2023, Huawei shocked the world by releasing the Mate 60 Pro phone, which contained a 7 nanome chip made in China. The Washington establishment panicked. How did they do that? But when you look

closer, the victory is hollow. They made that chip using older, less efficient machines, DUV lithography, and using a process called multi-atterning. Think of it like trying to draw a super fine line with a thick marker. You have to draw over it four or five times to

carve away the edges. It works, but it is slow, expensive, and has a terrible yield rate, meaning half the chips you make are broken and have to be thrown away. You can endure that inefficiency for a flagship phone. to prove a point. You cannot build a massive AI economy on

it. While China is struggling to perfect 7 nanome, TSMC in Taiwan and Samsung in Korea are moving to 3 nanome and 2 nanome. The gap is widening, not closing. This is fatal for China's AI ambitions. We are in the middle of the

AI revolution. Chat GPT, Gemini, Clawude. These models are trained on tens of thousands of Nvidia GPUs. If China cannot get those chips, they cannot train the models. China is currently resorting to smuggling. There is a thriving black market where Nvidia

chips are smuggled into China in luggage or through shell companies in the Middle East. But you can't smuggle 100,000 chips to build a data center without someone noticing. Without AI supremacy, China's surveillance state, section 12, becomes less effective. Their autonomous

weapons become dumber than America's. Their economy misses out on the productivity boom that AI promises. The silicon curtain effectively traps China in the technological past. It forces them to spend trillions reinventing the wheel while the rest of the world invents the flying car. And what happens

when you're cut off from the technology of the west? You try to build your own empire elsewhere. You look to the global south. You try to build a belt and road, but as we are about to see, that road is crumbling, too. 11. Belt and road to nowhere. If the chip war is the United

States building a wall, the belt and road initiative, BRRI, was supposed to be China building a bridge. Launched in 2013, it was marketed as the project of the century. The pitch was simple. China had too much concrete, too much steel,

and too much cash. The developing world, places like Pakistan, Sri Lanka, and Zambia, had no roads, no power plants, and no money. It seemed like a match made in heaven. China would loan these countries billions of dollars and Chinese construction companies would fly

in to build massive infrastructure projects. The world would get rich and all roads would lead to Beijing. Fast forward to today and the new Silk Road is looking more like a road to nowhere. We are currently witnessing a massive wave of sovereign debt crisis triggered

directly by Chinese lending. The narrative has shifted from China the benevolent banker to China the repo man. Let's look at the wreckage Sri Lanka. This is the poster child for Barri failure. China built the Hamban Tota

port for over $1 billion. The problem, nobody used it. It sat empty. When Sri Lanka couldn't pay back the loan, China effectively seized the port on a 99-year lease. It was a humiliating loss of sovereignty that sent shock waves through the global south. Pakistan, the

China Pakistan Economic Corridor, CPEG, was supposed to be a $62 billion gamecher. Instead, it has become a security nightmare. Chinese engineers are regularly targeted by terrorists. The power plants are drowning in debt called circular debt. And Pakistan is

teetering on the edge of default, constantly begging the IMF for bailouts to pay back Beijing, Zambia. In 2020, Zambia became the first African nation to default during the pandemic era, largely due to opaque Chinese loans.

The sheer scale of the bad debt is staggering. A report by the Keel Institute found that China had to bail out countries to the tune of $240 billion between 2008 and 2021. China is now spending more money rescuing its old

loans than it is making new ones. This has forced a humiliating strategic pivot. Xiinping has stopped talking about mega projects. The new slogan is small and beautiful. X show translation. We ran out of money and you guys can't pay us back so no more billiond dollar

dams. Here have a small hospital or a renovated library instead. But the damage is done. The Barri was supposed to buy China friends. Instead, it bought resentment. In Africa and Southeast Asia, locals are angry that Chinese companies import their own labor, even

for low-skilled jobs, destroy the environment, and bribe local politicians. And for the Chinese citizens back home, they are furious. Imagine you are a guy in Henan whose bank account is frozen because of the rural banking crisis. You turn on the TV and see your president promising $50

billion to African leaders. You'd probably think, why are we paving roads in Kenya when we can't even finish the apartment buildings in Jenjo? The Barri has turned into a geopolitical albatross. It drains China's foreign reserves while creating a ring of unstable, indebted client states that

offer little strategic value in a real conflict. But while the CCP struggles to control the world outside, they have nearly perfected the art of controlling the world inside. 12. the surveillance state safety net. As the economy crumbles and

the money part of the social contract evaporates, the CCP is doubling down on the control part. They are building a digital prison so sophisticated that it makes George Orwell look like he lacked imagination. We used to think the internet would liberate China. We were

wrong. China tamed the internet. Welcome to the panopticon. The foundation of this system is Skynet. Yes, they actually named it that. apparently never having seen the Terminator. This is the network of over 700 million surveillance cameras

blanketing the country. That is roughly one camera for every two citizens. But these aren't just cameras recording to a dusty VHS tape. They are connected to Dragonfly Eye, an AI system that can identify you by your face, your voice, and even your gate, the unique way you

walk, from 50 m away, even if you have your back turned or are wearing a mask. Connect this to the social credit system. While the western media sometimes exaggerates this as a single score, like a Black Mirror episode, the reality is

actually more insidious. It is a fragmented system of blacklists. If you cross the party, maybe you posted a complaint about a local official or you attended a protest or you were caught jaywalking too many times, you go on a list. Suddenly, you can't buy a

high-speed train ticket. You can't book a flight. Your internet speed is throttled. Your kids are banned from the best schools. You aren't arrested. You are just deleted from society. It is death by a thousand inconveniences. But the scariest development is

predictive policing. In regions like Shinjang, the government uses a platform called the EHOP, integrated joint operations platform. It aggregates data from everywhere. Your bank records, your electricity usage, your WeChat messages, your package deliveries. The AI looks

for abnormal behavior. Did you use a lot of electricity this week? Maybe you're hiding someone. Did you stop using your front door and start using the back door? Did you buy a lot of fertilizer? Did you download WhatsApp? If the algorithm flags you, the police show up. You haven't committed a crime. You are

just pre-criminal. This technology is now bleeding from Jing Jang into the rest of China. The CCP is terrified of the unrest that comes with economic stagnation. Unemployed workers protesting pensioners rioting. They know they can't pay people off anymore, so they must scare them

into submission. They are implementing the grid management system. Cities are divided into tiny square grids. Each grid has a grid manager, a snitch whose job is to know everything about the 50 families in their square. Who is pregnant? Who lost their job? Who is

arguing? It is high-tech feudalism. The ultimate goal is to create a society where resistance is mathematically impossible because the state knows you're going to rebel before you do. But here is the floor in the machine. Garbage in, garbage out. Local

officials, terrified of punishment, lie to the system. They fake the data to make their districts look safe and happy. The AI makes decisions based on fake numbers. The central government thinks everything is fine until a massive protest erupts out of nowhere.

Like the white paper protests against COVID lockdowns in 2022. The surveillance state buys the regime time, but it kills the human spirit. And a country of scared, watched, compliant robots cannot invent, cannot create, and cannot lead the world. And all this

high-tech control ignores the most basic primal vulnerability of the Chinese state. The one thing AI cannot fix. The fact that China cannot feed itself. 13. Feeding the dragon. Let's step away from the high-tech dystopia for a moment and

talk about something much more primal. Something that has toppled more dynasties in Chinese history than any foreign army ever has. Hunger. There is an old Chinese saying. It translates to to the people food is

heaven. Conversely, if there is no food, there is hell to pay. On the surface, China looks like an industrial juggernaut. But underneath the shiny skyscrapers, China has a terrifying geographical problem. It has 20% of the world's population,

but only 7% of the world's arable land. And thanks to decades of rampant industrial pollution, nearly 20% of that land is contaminated with heavy metals like cadmium and arsenic. Basically, China cannot feed itself. This is the regime's deepest insecurity. Xiinping

talks about it constantly. He has issued orders that the rice bowls of the Chinese people must be held firmly in their own hands. But the data says otherwise. China is the world's largest importer of food. They import over 100 million tons of soybeans a year, mostly

from Brazil and the US just to feed their pigs. Without those soybeans, the pigs die. When the pigs die, pork prices skyrocket. When pork prices skyrocket, the people get angry. Remember African swine fever in 2019? It wiped out nearly

half of China's pig population. The government was so terrified of the social unrest caused by high pork prices that they had to tap into the strategic pork reserve. Yes, that is a real thing. Deep in secret frozen bunkers, the CCP

hoards millions of tons of frozen meat just in case. But the vulnerability isn't just food, it's energy. China is the world's largest importer of oil and natural gas. They import roughly 70 to 80% of their oil consumption. And here is the kicker. Most of that oil comes

from the Middle East and Africa. To get to China, those oil tankers have to pass through a tiny narrow stretch of water near Singapore called the Straight of Malaca. This is the Malaca dilemma. It is the choke point of the Chinese economy. At its narrowest point, the

straight is only 1.7 mi wide. In the event of a war over Taiwan, Section 9, the United States Navy doesn't have to invade mainland China. They don't have to land a single marine on the beach. All they have to do is park a few destroyers in the Malaca Strait and turn

the oil tankers around. Within weeks, China's economy would suffer a cardiac arrest. The trucks would stop running. The power plants would shut down. The lights would go out. The tanks would run out of fuel. Xiinping knows this. This is why he is obsessed with building

pipelines through Pakistan, CPEC, and Russia to bypass the straight. But those pipelines are expensive, vulnerable to terrorists, and can only carry a fraction of what ships can carry. This resource insecurity creates a use it or lose it mentality. It explains why China

is bullying the Philippines and Vietnam in the South China Sea. They aren't just doing it for national pride. They are desperate to control the fishing grounds and the potential underwater oil reserves. They are literally scraping the bottom of the ocean because they are running out of options at home. And it

explains why they have been damning up the Mong River, cutting off water to downstream countries like Thailand and Cambodia during droughts. When you are thirsty, you don't care if your neighbors die of thirst. This desperation makes a country aggressive.

A secure superpower can afford to be generous. An insecure superpower terrified that its supply lines could be cut at any moment lashes out. And that lashing out has led to the most spectacular diplomatic failure of the 21st century. 14. Wolf Warrior

isolation. If you want to make friends and influence people, here is a tip. Don't scream at them, threaten to nuke them, or tweet fake photos of their soldiers murdering children. Someone should have told the Chinese foreign ministry. For decades under Dong

Xiaoing, China's foreign policy motto was Taang Yang Hoy. Tauang Yang Hoy. It means hide your strength, b your time, never take the lead. It was brilliant. It made the West feel comfortable helping China rise. But around 2017,

Xiinping decided the biting was over. It was time to bark. Enter the Wolf Warriors. Named after a Rambo style Chinese action movie series where Chinese special forces beat up evil American mercenaries, this new breed of diplomat was encouraged to be aggressive, rude, and confrontational.

The face of this was Xiao Liian, the former foreign ministry spokesman. He was famous for spreading conspiracy theories on Twitter, like the idea that the US Army brought CO to Wuhan and picking fights with foreign reporters. It felt good for the domestic audience.

The nationalists on Waybo loved seeing their officials tell off the West. But internationally, it was a catastrophe. Let's look at the scoreboard of wolf warrior diplomacy. Europe. China pushed the EU so hard that they froze a massive

investment deal that took 7 years to negotiate. Australia. After Australia asked for an independent investigation into the origins of CO, China slapped insane tariffs on Australian wine, barley, and coal. The result? Australia didn't apologize. They just formed a

military alliance with the US and UK orcus to get nuclear submarines. Great job, Beijing. India. Chinese troops started a medieval brawl with clubs and stones on the Himalayan border in 2020. The result, India, formerly neutral, has

now banned Tik Tok, kicked out Chinese tech companies, and moved firmly into the American orbit. The Philippines. China has been blasting Filipino supply ships with water cannons and militarygrade lasers. The result, the Philippines granted the US military

access to four new bases, some of which are dangerously close to Taiwan. China has managed to do the impossible. It has united the Democrats and Republicans in the US. And it has united Japan, South Korea, the Philippines, India, and Australia into a containment ring. This

is the encirclement that Beijing always complained about. But they created it themselves. They fulfilled their own paranoid prophecy. And who are China's friends now? Who is in their corner? Russia. Xiinping and Putin declared a no limits friendship right before Russia

invaded Ukraine. Now China is tied to a global pariah. It's an embarrassing relationship where China has to act as the senior partner, propping up the Russian economy while alienating their biggest customers in Europe. North Korea, the crazy cousin you can't get

rid of. Iran, another pariah state. That's the axis of autocracy. It's not exactly the Avengers. It's a coalition of the sanctioned and the desperate. Even Italy, the only G7 nation that foolishly signed up for the Belt and Road Initiative, officially quit in late

2023. They realized it was a bad deal. This isolation is dangerous because it creates an echo chamber. When you fire all the diplomats who understand the West and replace them with yesmen who only know how to shout slogans, you lose the ability to read the room. You start making miscalculations. You start

believing your own propaganda that the East is rising and the West is declining. Even when the economic data says the exact opposite. And this brings us to the final terrifying conclusion. We have looked at the demographics, the debt, the despair, and the diplomacy.

When you add them all up, you don't get a country that's about to rule the world. You get a wounded animal. And as any hunter will tell you, a wounded animal is the one that charges. 15. The danger of the wounded giant. We have arrived at the end of our tour through

the ruins of the Chinese dream. And you might be tempted to sit back, crack open a beer, and say, "Good. The CCP is failing. The threat is over. America wins by default." That would be the most dangerous mistake you could make. History teaches us a very specific, very

bloody lesson. Rising powers are often peaceful. Declining powers are almost always violent. This is the peak power trap. It is the geopolitical equivalent of a cornered animal. When a superpower realizes that its best days are behind it, that its economy is stagnating, its

population is shrinking, and its rivals are encircling it. It doesn't usually go gently into that good night. It lashes out. It tries to use its remaining military strength to smash the window of opportunity before it shuts forever. Let's look at the historical precedents.

They are terrifying. Example a Germany 1914 Imperial Germany felt encircled by Russia, France, and Britain. They looked at the rapid industrialization of Russia and calculated that by 1917, Russia would be

too strong to defeat. So the German generals decided they had to fight now or lose forever. That calculation gave us World War I. Example B, Japan, 1941. Why did Japan attack Pearl Harbor? It wasn't because they thought they were

stronger than the United States. They knew they were weaker, but the US had cut off their oil. The Japanese economy was strangling. They calculated that if they waited a year, their navy would be out of fuel. So, they launched a suicidal gamble to seize the resources of Southeast Asia. Xiinping is reading

these same history books and right now he's looking at a dashboard flashing red. He sees the US cutting off his chips. Section 10. He sees his population collapsing. Section 1. He sees his economy rotting from debt. Section 4. He knows that China might

never be stronger relative to the United States than it is right now. In 10 years, China will be older and slower. In 20 years, it will be a geriatric ward. This creates a use it or lose it mentality. Regarding the military, if you are Xi Jinping and you believe that

the great rejuvenation of the Chinese nation is your destiny, but you also see the walls closing in, what do you do? Do you accept that China will grow old before it gets rich? Do you accept that the Communist Party will slowly fade into irrelevance? Or do you roll the

dice? A stagnant China is dangerous because it is unpredictable. A rapidly growing China is predictable. They want stability to keep making money. A crashing China has nothing to lose. And let's talk about the other nightmare scenario, collapse. There is a strain of

collapse porn on the internet, YouTubers and pundits who gleefully predict the CCP will fall tomorrow. But have you really thought about what the collapse of the Chinese state looks like? It doesn't look like the fall of the Berlin Wall with David Hasselhoff singing on the rubble and everyone drinking Coke.

It looks like Syria, but with nuclear weapons. The Chinese Communist Party has spent 70 years destroying civil society. There is no organized opposition. There is no Vaklav Havl or Nelson Mandela waiting in the wings. There are no churches, unions, or student groups

strong enough to take over. If the CCP falls, there is a vacuum. And in China's history, whenever the central government collapses, it is followed by decades of horrific civil war and warlordism. Imagine a civil war in a country with 300 to 500 nuclear warheads, thousands

of biological and chemical labs, the world's largest standing army. Who gets the codes? Who gets the anthrax? Who controls the dams? A chaotic collapse of China would trigger the largest refugee crisis in human history. We talking about tens of millions of people fleeing

to Korea, Japan, Vietnam, and possibly across the Pacific. It would vaporize the global economy. Remember, even in stagnation, China is the world's factory. If the factories in Guangdong stop running because of riots or civil war, the supply chain for everything

from antibiotics to iPhone batteries vanishes. Walmart shelves go empty. Inflation hits 500%. We're inextricably linked to this wounded giant. We are like two mountain climbers tied together by a rope. If China falls off the cliff, they might

pull us down with them. So, the West is in a paradoxical position. We need to contain China's aggression, the wolf warriors, the Taiwan threats, but we also technically need China to remain stable enough not to explode. We are trying to gently deflate a $50 trillion

bubble without popping it. It is the most difficult diplomatic tightroppe walk in history. The Chinese dream promised a return to greatness. It promised that after a century of humiliation, China would reclaim its rightful place as the Middle Kingdom, the center of the world. But the tragedy

of the CCP is that in their obsession with control, they have strangled the very people who could have made that dream a reality. They traded their future for power. And now, as the dream fades and the cold reality of demographics and debt sets in, the dragon is waking up to a nightmare. The

question is, will it try to wake the rest of us up with fire? 16. Final thoughts. So, where does this leave us? We've covered a lot of ground. From the lonely bare branches, men in rural villages to the high-tech surveillance cameras in Shinjang. From

the ghost cities of Everrand to the smuggling routes of the chip war. The tapestry we've woven shows a superpower that is hollowed out. The facade is shiny, the high-speed trains are fast, and the skylines are neon. But the foundation is sand. The end of the

Chinese dream isn't a prediction for 2050. It's happening right now. You're watching it in real time. Here are the three key takeaways you need to carry with you. One, the math always wins. You can print money. You can censor the internet. You can jail dissident, but

you cannot jail arithmetic. The demographic collapse is the gravity that will pull everything else down. No policy can fix the fact that there aren't enough babies. Two, the social contract is broken. The deal was we rule, you get rich. That deal is dead.

Now it's we rule, you suffer. When a regime loses its economic legitimacy, it has to rely on fear and nationalism. Expect China to get louder, angrier, and more paranoid. Three, this affects you. Do not think this is just a story about

over there. A stagnant China exports deflation. It exports instability. It exports risk. The cheap goods you've enjoyed for 30 years, that era is ending. The relative peace of the postcold war era, that's over, too.

We're entering a new period of history, a period of great power stagnation. It's going to be messy. It's going to be volatile. If you are an investor, be careful. The old rules of buy China are dead. If you are a policy maker, be vigilant. The wounded giant is looking

for a fight. And if you are just a regular person trying to understand the world, keep your eyes open. The dragon isn't rising anymore. It's thrashing. I want to hear from you. Seriously, go down to the comments right now and tell me if you were Xiinping and

you saw these numbers on your desk, what would you do? Would you open up the country and risk losing power? Or would you invade Taiwan to distract everyone? Let's argue about it in the comments. I'll be reading the best theories. If you found this deep dive valuable, if you learned something you didn't see on

the nightly news, please hit that like button. It tells the algorithm that people actually have attention spans longer than 15 seconds. And if you want to understand the other side of the global economy, watch out for our upcoming video on why the US dollar is almost impossible to kill. is the

perfect companion to this story.