China has declared the economic war (but it does not say it): because on cars, steel and chemistry XI is more dangerous than Trump

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Where it is over GAO SHANWEN? Gao has been disappeared for a few months. Has lost the license to exercise how Economist chief of the Sdic Securities of Hong Kong, a state financial financial. Since then nothing is known about him. Yet he was a man of the system and enjoyed respect for everyone. He had worked on the Central Bank of Beijing, he had been councilor of very high officials. He had never objected to the dynamics of Xi Jinping’s power, but he was equally silenced. His fault is to have told the truth, for a few fleeting moments, on the real data of growth (it is less than half of the official one, he said) and youth unemployment (more than double the official one).

The era of the economic war

Gao’s story concerns us, because it refers to our problems in Europe and Italy. Warren Buffettthe mythical investor, observed that the duties announced by Donald Trump are an act of economic war. Certainly they are the way America downloads its internal contradictions – tensions for growing inequalities, fiscal iniquity, debt – on the rest of the world, blaming it with its evils. However, there is another economic war carried out, this without anyone having never even declared it. It is that China of Xi Jinping, which acts in this way in a way and contrary to Trump. China also pays the immense cost of its contradictions to the rest of the world. Not through duties, but their opposite: the wider and more aggressive mercantilism that economic history remembers. The result is an excess of production capacity in the planet in all industrial sectors with greater labor intensity. The commercial wars of our time are readable, in this perspective, also as a conflict between large economic areas for the allocation of losses – losses of jobs, purchasing power, social and political stability – which in the long run all this excess of production capacity will impose. Someone, somewhere, will put something to us. And of course Italy is among the candidates, if we do not react.

The dark evil of young people (and not only)

Gao Shanwen is a reserved man. Last December, suddenly, in a conference he pronounced a phrase immediately became viral in Chinese social networks before the censorship managed to remove it: « Younger people in China are lifeless and middle -aged people have nothing to live for». Only the oldest people, he added, are « full of vitality ».

The reason is the incredible level of youth unemployment, which was also discussed on Friday at a conference of the Aspen Institute in Milan on the « future of capitalism ». Yasheng Huanganother Chinese economist of Massachusetts Institute of Technology of Boston, writing that the real unemployment rate In the People’s Republic it would not be around 17% at all (Beijing started to publish the data in December, after two years of silence). Rather it would be to a 40% astronomical or above. For example, official data do not count unemployment outside the cities And that of those who leave the studies, but has not yet found the first job.

Then Gao flew to Washington and in another meeting he added an observation that marked his destiny. « We don’t know the real number of real growth in China – he said -. My speculation is that in the last two or three years the real data of the gross domestic product is around 2%, even if the official number is close to 5% ». Disciplinary measures have taken place on him in a few days, and it is understood. For three years the second economy of the world – first for production volumes – would have grossly falsified its data. The gross product would be about 10% lower than the official declarations, as if a mass of turnover had disappeared from the planet more or less to Italy.

An exaggeration? Probably not. Rhodium Group, an independent analysis company, has estimates similar on the basis of investments, consumption of families or the real estate market. Because what happened in China is under everyone’s eyes. For years, a myriad of provincial authorities has supported local growth by selling new buildings construction licenses, until the real estate bubble has ruinously burst. The manufacturers failed, tens of millions of apartments have remained empty, invented, or sold but never built for bankruptcy of the buildings. The Wall Street Journal report Second estimates to which the destruction of value was 18 thousand billion dollars, a figure three times higher than that of the subprime crisis in America and equal to the entire economy of China itself. Each family of the People’s Republic seems to have lost $ 60,000 on average.

Absent consumption

Above all, the regime does not know or does not want to react to this catastrophe. For mainly political reasons, related to the personalistic and authoritarian drift of Xi Jinping, he is not helping the Chinese enough to emancipate themselves economically. As Yasheng Huang from the Mit of Boston recalls (which no longer dares to put foot in his hometown) consumption in China are a ridiculously low altitude of the economy: Just 39% of the turnover and even falling since the beginning of the centurywhile 49% in South Korea Austera, 56% in rigid Japan, 58% in Depresso Italy, as well as 68% in America.

The immense people of the Chinese countryside (without rights)

XI does not want a consumption economy; It is extraneous to its severe Maoist vision. He wants a production economy, which he exploits not the internal demand but that of the rest of the world. Above all XI does not want to move on to a social model that gives more freedom of movement and therefore more self -determination to ordinary people. The system of hukou (an authorization mechanism to migrate from countryside to cities) in fact relegates 700-800 million Chinese, a tenth of humanity, to a status of second-class citizens: they do not have the right to move to cities, therefore they live there as illegal immigrants, work there in black and are underpaid; They do not have the right to make children study in the city, nor to subsidies on public transport. Even Vietnam, also as a single « communist » party, has gradually opened in this.

Former Finance Minister of Beijing Lou Jiwei has estimated that canceling the system of hukou In itself it would grow the internal consumption of a third, but it will not happen. It is contrary to the vertical vision of XI. Instead, it continues to focus everything on a vast system of more or less visible subsidies – often granted locally – for Push growth rates mechanically installing increasing production capacity for exports: steel, aluminum, cars, solar panels and wind turbines, chemistry, pharmaceuticals, consumption electronics, machine tools, appliances, concrete, soon also trains and planes with a small and large fuselage. Everything that can serve to humanity.

One of the results, as you can see belowit is a constant increase in total debt in China, public and private, often in the opaque-company-checks controlled by provincial governments. The growth is such that in the autumn of 2022 the total debt in the People’s Republic, in proportion to the economy, has exceeded the equivalent of the unwanted United States (data of the international regulations). Meanwhile, families pagan In interest on mortgages almost a fifth of their income – more than Americans at the time of subprime – for houses with a value very below the purchase price.

Global aggression: cars, steel and chemistry

Another result is that the Chinese production capacity has exploded, to the unbeatable typical prices of that system. Especially for this reason today most of the main categories-produces have an excess of factories and workers in the world compared to international demand.
Last year The Popular Republic produced 33.7% of the cars released from the gates of the planet’s factorieswhose international average is close to the rupture point: just used the 60-65% capacity, with a third of the inactive systems.
In the steel, China last year presided over 54.6% of the world offerseven times more than India who follows as a second competitor; McKinsey underlines That the market remains fragile, with an excess of production of 50 million tons compared to the demand in only 2024: as if practically all the activity of the plants of Italy and Germany was too much.
In chemistry, Chinese production has grown by 40.9% in the last five years – often by highly polluting charcoal powered plants – and now it presides over 43% of the world marketwhile in the same period Italian production fell by 11.6% and the German one of 15.3%.
In foundry China has more than tripled the volumes since the beginning of the century, with the second in the market in the market that is worth a fifth and Italy at the minimum since 1980.
Above all, The Chinese race is all aimed at exports (as you can see below) and in fact He is creating unemployment all over the world.

Of course it’s not all the fault of Xi Jinping. It is not his fault If Italy does not have an industrial policyif he cannot dissolve the node of an unacceptably more expensive energy cost than the rest of Europe. It is not XI’s fault if in Italy we do not invest in training, technology, research and development (such as writing Francesco Giavazzi). But you cannot remain with your eyes closed in the face of Chinese industrial aggression, the result of the political choices of the Beijing man strong.
Trump’s improvised protectionism cannot work. But you need a strategy that leverages Europe’s commercial weight to protect the producers, give time to leaving without tears from the sectors that can no longer be defended, prepare new investments and force Beijing to correct the shot. Even by applying, where it serves, higher duties. All choices for which clarity of ideas and units between Europeans would be needed. Not the show we are witnessing, not only in Italy.