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Xi Jinping’s 25 Mistakes: Why China’s Economy is Dying

They said China would surpass the US economy by 2030. They said China was the unstoppable force. They didn’t count on Xiinping, the man doing more to wreck China’s economy than any American president ever could. Xiinping is the greatest gift to the US. And today I will show you why through 25 of his worst mistakes. each one driving China closer to the edge of collapse. Let’s get started. Number 25, the anti-corruption campaign. Politicized and paralyzing. She’s anti-corruption campaign began with noble rhetoric, but it quickly became a tool for consolidating power, purging political rivals, crippling factions not rial to she, creating a climate of fear in government and business. 

Today, Chinese officials delay decisions, avoid risks, prioritize political correctness over performance. Result, policy paralysis at every level of government and industry. And ironically, real corruption persists, but now even even more secretive and dangerous forms. When a government fears its own survival more than economic stability, collapse accelerates. Number 24, destroying Hong Kong’s economic magic. One country, two systems was supposed to last until 2047. 

Hong Kong was China’s crown jewel, a global financial hub with rule law, open markets, and trust. She killed it early. After the 2019 protests, he imposed the draconian national security law, arrested pro democracy activists and lawmakers, crushed press freedom, dismantled judicial independence. Result: thousands of professionals and experts fled Hong Kong. Global firms shifted operations to Singapore and Tokyo. Hong Kong’s reputation as an open, reliable financial hub is gone. She destroyed Hong Kong’s unique economic value to please his political ego and crippled China’s best link to the global capital markets. 

Xiinping is the greatest gift to the US. Hong Kong’s decline is Wall Street’s gain. Number 23, she’s present for life power grab. In 2018, she abolished presidential term limits, making himself effectively president for life. This single move shattered the careful political balance that Deniaing has built to prevent another mount. Consequences, no internal checks on she’s power, no clear succession plan, creating huge future instability. Top officials promoted for royalty, not competence. 

Markets hate uncertainty. Foreign investors know that one main rule leads to policy whiplash and risk. Domestic entrepreneurs and bureaucrats have grown cautious. Knowing she can change direction on a wing. Xiinping is the greatest gift to the US. No American leader could have done more to undermine China’s future political stability. Number 22. Turning China into a global outcast. She promised wing-wing cooperation but delivered wolf warrior diplomacy. Diplomats lashing out online and in foreign capitals. Arrogant messaging alienating allies. Military bracemanship in Taiwan Strait and South China Sea. Result, China’s favorability ratings are collapsing worldwide. Many developing nations burned by Ben Road regret over reliance on China. 

The US and its allies are forming historic new tech and security alliances precisely to counter China. She’s aggressive posture has turned a rising China into a global outcast, driving even neutral nations into the US-led camp. Number 21st, excessive military spending for a Taiwan invasion, risking national bankruptcy. She’s obsession with reunifying Taiwan is driving China down a dangerous economic path. To prepare for a possible invasion, she is massively expanding the PLA Navy, now the largest num largest by the number of ships, pouring hundreds of billions into new missile systems and hypersonic weapons, investing in expensive amphibious landing craft and their Taiwan scenarios, accelerating air force modernization with stealth fighter production. 

Officially, China’s defense budget is about 230 billions, but choose spending is likely far higher with huge offbooks spending hidden in state-owned enterprises. This military buildup sucks resources away from civilian infrastructure and social progress, forces local governments to bear hidden military costs, drives debt, and clouds out private sector investment. Parallels to the USSR are striking. The Soviet Union’s military overreach in the 1980s helped bankrupt it, a key factor in its collapse. She risks repeating this mistake. An invasion of Taiwan would not only be a military disaster, it would be an economic suicide mission. 

Meanwhile, every dollar she pours into his military is a dollar not invested in China’s collapsing economy, its poor citizens, or its aging population. Xiinping is the greatest gift to the US. America can counter China’s military rise as China bankrupts itself trying to invade Taiwan. Number 20, Jack Ma’s disappearance, killing the entrepreneurial confidence. Remember when Jack Ma was the face of Chinese innovation? Alibaba was China’s Amazon, a world leader in e-commerce, cloud computing, and fintech. 

Then one speech changed everything. In October 2020, Jack Ma dared to criticize China’s financial regulators. The response swift and brutal. Jackmar vanished from public view for months. His company’s $ 37 billion ANT group IPO, the largest in history, was cancelled by regulators just days before launch. The message was clear in she’s China. No private citizen can outshine the party. And the fallout ungroup was broken up. Alibaba stock crashed. China’s tax sector entered a deep freeze. Entrepreneurs everywhere got the the signal. Keep your head down or risk losing it. 

Innovation dies when fear spreads and she’s message killed more than one IPO. It killed trust in China’s business environment. Number 19, arbitrary tech crackdowns suffocating the private sector. Jack Mara was just the first. She unleashed a broader assault on China’s private tech giants. Mtoan fined nearly$500 million US for monopolistic practice. Di China’s rate hailing leader forced to delist from the New York Stock Exchange after a surprise cyber security prop. Gaming companies slapped with strict limits on playtime and content. The worst part, no clear rules, no due process. Companies operate in constant fear of a midnight knock or a sudden addict. As a result, Chinese tax stocks lost trillions in market value. Foreign investment in China’s tax sector plummeted. 

Top tech talent is looking for exits to Singapore, Dubai, Silicon Valley. She’s war on tech is a war on China’s future growth. Number 18, nationalizing the private sector and turning entrepreneurs into bureaucrats. Under sheep, the line between public and private is vanishing. Thousands of private companies have been forced to establish party committees inside their boards. These aren’t uh ceremonial. They have actually real veto power over company decisions. It’s a return to Maui style control where politics trumps performance. 

The impact risktaking declines. Innovation slows. Bureaucratic rot spreads. Entrepreneurialship with party oversight isn’t entrepreneurialship. It’s corporate theater. and it’s choking the life out of what was once the world’s most dynamic private sector. Number 13, punishing wealth and driving capital abroad. Common prosperity sounds nice, but in she’s hands it means weaponizing envy and fear against the wealthy. Recent years have seen weaponization of tax audits, public shaming of successful entrepreneurs, forced donations to state causes. Result, China’s reach of voting with their feet and their money. In 2023 alone, an estimated 13,000 millionaires left China, the highest of any country. 

They’re taking their capital, their knowhow, and their networks with them. You can’t build a modern economy while telling your most successful people to get out. Number 16, destroying property market confidence and bursting the bubble without a safety net. For decades, real estate was China’s growth engine. Property accounted for 30% of GDP. a dangerously high dependency. She inherited a bubble, but instead of deflating it carefully, he chose blunt force intervention, imposed the three red lines policy to limit developer leverage, triggered a liquidity crisis among top developers like Ever Grande and Country Garden, refused to allow market forces to clear the sector. 

Now you have millions of unfinished homes, mortgage boycotss by angry buyers, banks exposed to trillions in bad loans. She won’t let prices fall, fearing social unrest. But by freezing the market now, he’s created a zombie property sector that drags down its entire economy. Number 15, mismanaging local government debt, creating a hidden crisis. Local governments are the backbone of China’s infrastructure bone, but they racked up trillions in offbalance sheet debt to fund it. Their main revenue source land sales to developers. But with the property market frozen, that revenue stream has collapsed. 

So now local governments are cutting official essential services, delaying civil servant salaries, selling dubious investment products to retail investors to pluck the holes. The risk a cascading local debt crisis that could engulf China’s entire financial system. And she has no plan to address it because admitting a problem would mean admitting failure. Number 14, zerocoid disaster paralyzing the economy. While the world reopened, China shut down. She’s zero co policy meant lockdowns of entire mega cities like Shanghai. Months of home confinement. Ports shut down disrupting global supply chains. Factories idled. Consumer spending crashed. 

For nearly three years, zero COVID strangled China’s economy. And then when she finally abandoned the policy in late 2022, he did so abruptly and without preparation, triggering a chaotic wave of infections and further public anger. Xiinping is the greatest gift to the US. While America’s economy rebounded, China’s economy stumbled. Number 13, driving out foreign investors, eroding robo chest. Once China was the world’s top destination for foreign direct investment, now it’s a risk zone. Why? Surprise raids on foreign consulting firms, arbitrary detention of foreign executives, expanded anti-espionage laws criminalizing normal business activities. 

Result FDI into China fell by 82% in the Q1 of 2024. Multinationals are accelerating China plus one strategies. Global CEOs are telling investors China is uninvestable. Number 12. Censorship and fake data destroying transparency. She doesn’t like bad news, but suppressing reality doesn’t change it. Under his rule, youth unemployment data was suddenly paused after it exceeded 21%. Independent financial research firms have been shut down or harassed. Access to key economic data is increasingly restricted. Investors hate uncertainty and they’re fleeing a market where the numbers cannot be trusted. 

The CCP is the world’s most expensive lie and she’s censorship is making it even more costly. Number 11, use unemployment crisis, losing a generation. China’s youth unemployment hit a record 21.3% before the government stopped publishing the data. Some analysts believe the real figure is over 30%. What is she offering the jobless youth? More party ideology classes, military jewels, encouragement to take beta jobs like street, wendor, or delivery driver.

China’s brightest young people are either giving up, lying flat, or leaving the country in record numbers. Without an empowered, hopeful youth, China’s long-term growth is doomed. Number 10, the Shongan vanity project wasting trillions. She’s pet project, Shan new area, was supposed to be a model for the cities of the future, a magnet for innovation and talent. Reality, trillions wasted, empty streets, ghost towns, mass displacement. You can’t order Silicon Valley into existence. Real innovation comes from freedom, not fiat. Xiinping is the greatest gift to the US. While China builds ghost cities, America builds world changing companies. Number nine, picking fights with the West, triggering global backlash. 

She believed he could bully smaller countries and intimidate the West. He tried trade coercion against Australia on wine, coal and Bali. Hostage diplomacy against Canada in the infamous Moanzo incident. Military pressure on Japan, Taiwan and the South China Sea neighbors, economic threats against European firms. But instead of submission, she triggered Australia doubling its defense budget and tightening alliances. Canada hardening its China stance. Japan ramping up military spending for the first time in generations. Europe becoming more weary of Chinese investment and tech. Result, the very anti-China coalition she feared is now forming. led not just by the US but by China’s own neighbors and trading partners. Number eight, crippling demographics. 

Engineering a population crisis. She inherited a demographic problem, but he made it much worse. For decades, China’s one child policy suppressed birth. Now, despite reversing that policy, China’s birth rate continue to plummet. Why? Sky-high housing and education costs, lack of work life balance, repressive political climate, young Chinese couples simply don’t want to bring children into Xiinping’s China. In 2023, China’s population officially shrank for the first time since the Great Leap Forward. By 2035, over 400 million Chinese will be over 60 years old. The workforce will be shrinking rapidly. 

A declining population means slower growth, lower productivity, massive pension and health care burdens. And she has no real plan to fix it beyond empty slogans. Number seven, alienating global supply chains, ending China’s factory dominance. China once positioned itself as the factory of the world. Now global companies are voting with their feet. Thanks to she’s zero COVID fiasco, arbitrary crackdowns, uh rising geopolitical risk, we now see Apple shifting iPhone production to India and VNI, Nike, Adidas, and others moving supply chains to Southeast Asia. Foxcon diversifying operations outside of China. 

She thought China’s manufacturing dominance was permanent, but no CEO wants to be trapped in a system where the party can shut your business down overnight. Number six, the Belen wrote that trap losing money and goodwill. She launched the bow and road initiative as a grand geopolitical strategy build infrastructure abroad expand China’s influence the developing countries to China economically but the reality a global debt trap and a massive financial liability many belt and road projects are poorly planned corruption readen environmentally ally damaging. Dozens of countries now struggle to repay Chinese loans. China has been forced to restructure or write off billions. 

Anti-China sentiment is rising in many partner nations. And at home, Belen Road is draining resources she can no longer afford. Number five, overpoliticizing business, smothering market forces in she’s China. Party leadership now trumps merit in business. Banks pressure to lend to stay favored industries even if they are unprofitable. Private firms push to align with party slogans and goals. SE protect it no matter how inefficient. This system misallocates capital, clouds out genuine innovation, encourages corruption. She thinks he can engineer growth through top-down control, but markets, not slogans, drive real economic progress, something he refuses to learn. Number four, creating a surveillance state, killing creativity and confidence. 

She has built the most advanced surveillance state in human history. More than 600 million surveillance cameras, AI facial recognition tracking citizens movements, online activity monitored and censored, social credit scores punishing undesirable behavior. The result, a society where fear rings and innovators cannot thrive in an environment of constant surveillance. Many are choosing to leave. Others simply stop taking risks because in she’s China, a wrong word can destroy a Korea. The CCP is the world’s most expensive lie and she surveillance state is one of its most costly illusions. Number three, crushing the free thought. Destroying the ION ecosystem. China’s success in past decades was powered by its open curious minds in universities, in startups, in research labs. 

She’s reversing that. Academia faces growing censorship and party control. Independent media is nearly extinct. Foreign nos have been driven out. Online research and online speech is tidily monitored and punished. Without intellectual freedom, scientific research suffers. Innovation stagnates. Global collaboration collapses. She wants obedience over originality, but that will cost China dearly in its global knowledge economy. Number two, global tech isolation. Engineering China’s tech backwardness. She believed he could achieve tax self-sufficiency through sheer will. He launched made in China 2025 now barely now largely abandoned. Heavy subsidies to build domestic chip makers, harsh restrictions on foreign tech firms. 

But the US and its allies responded, cutting China off from advanced semiconductors, tightening export controls, restricting access to critical chipmools. Now China’s tax sector faces severe talent shortage. Inability to source cuttingedge chips. Growing dependence on outdated technology. No modern economy can thrive without global tech integration. and she had boxed China out of the most critical sectors of the future. Number one, hubris, believing he can command the market and the world. He believes he can command markets through fiat, bend demographics to his will, bully the world into accepting China’s dominance, force innovation through slogans, defy economic fundamentals. 

This hubris is leading to policy paralysis, massive capital flight, talent drain, global isolation, and as the costs mount, she doubles down instead of cost correcting. Xiinping is the greatest gift to the US because every one of his mistakes make America’s job easier and unites the free world against China’s authoritarian model. So, there you have it. 25 of Xiinping’s worst mistakes. Each one pushing China’s economy closer to collapse. If you value truth over propaganda, subscribe now because here I say what they want. I show what they hide. See you next time.

Hedge Fund Founder | Portfolio Manager | YouTube Commentator | Newsletter Author

Ken is the portfolio manager of the YCC International Value Fund, LP, a hedge fund positioned to capitalize on China’s economic unraveling and the global restructuring of supply chains. He runs the fast-growing KenCaoMacroLens YouTube channel, where he explains complex economic and geopolitical shifts for investors, policymakers, and the broader public. He also authors The China Crash Newsletter, covering China’s decline, the rise of Japan and Taiwan, and the forces reshaping Asia.

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Ken Cao

Ken Cao

Hedge Fund Founder | Portfolio Manager | YouTube Commentator | Newsletter Author
Ken is the portfolio manager of the YCC International Value Fund, LP, a hedge fund positioned to capitalize on China’s economic unraveling and the global restructuring of supply chains. He runs the fast-growing KenCaoMacroLens YouTube channel, where he explains complex economic and geopolitical shifts for investors, policymakers, and the broader public. He also authors The China Crash Newsletter, covering China’s decline, the rise of Japan and Taiwan, and the forces reshaping Asia.

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