Societal volatility grows + Risky fracking + 50 years of diplomacy

Xi’s vision of common prosperity is put to the test

What has happened to several thousand small savers in China’s central province of Henan may have shaken their worldview to the core. For months, they have been unable to access their bank accounts after four regional banks froze them in the wake of an alleged speculation scandal (China.Table reported).

The banking scandal in Henan may only involve a relatively small sum in economic terms. Nevertheless, it has stirred up a primal fear among the population. Since the beginning of the country’s economic opening, society has been held together by a silent agreement: The Chinese willingly surrender their claim to a political say as long as the party leadership in Beijing ensures a steady rise of material living standards. And for decades, the plan worked perfectly: Between 1978, the beginning of Deng Xiaoping’s reform policy, and Xi Jinping’s inauguration in 2013, China’s gross domestic product increased more than 64-fold.

But the tide has turned completely in the wake of the dogmatic “zero-Covid” policy at the latest. Economic growth has virtually ground to a halt: Between April and June, the gross domestic product grew by only 0.4 percent year-on-year. Compared to the first quarter of the year, the world’s second-largest economy actually shrank by 2.6 percent. The immediate effects of the impending recession are beginning to show more and more clearly. In the overheated real estate sector, a central pillar of the domestic economy, a downward spiral is already impending: Currently, tens of thousands of Chinese are threatening to stop making their mortgage payments because their apartment buildings are sitting around unfinished. (China.Table reported).