Will China invade? Ask Xi Jinping

The world of investing is no longer where the action is or where the big bets are being placed. Central bankers have ensured the?markets will have enough liquidity, while cryptocurrency enthusiasts are determined to first find out how high Bitcoin can rise before we all find out who will blink first and topple the digital currency market: central bankers (outside of China) or those enthusiasts and their possible unwillingness to continue to be exuberant.?

The action and the real exuberance?is, instead, can be seen in the halls of Beijing and in the Taiwan Strait. There, wagers are being placed on the chances Beijing will no longer simply talk about invading Taiwan but will make good on its promise.

As such, an increasing number of official statements, authorized statements, off-the-record comments, educated guesses and even sheer speculation on the matter have replaced the quarterly analyst meetings, the IR announcements, the chairmen's comments, analysts' expectations, and pundits' views. Let's hope the former group does not result in a great military crisis the way the latter group helped produce a financial crisis over a decade ago.?

Here,?Iain Marlow deserves credit for trying to point out the vast domestic downside that Xi Jinping and the Chinese Communist Party may face should they decide to just "go for it" and invade Taiwan in his most recent commentary, "Why War With Taiwan Would Be a Huge Gamble for China’s Xi." Certainly, Marlow's previous commentaries have been timely and excellent. I've even been glad to share them with others here, including his important look at Carrie Lam's re-election chances, the dilemma faced by Jimmy Lai, the humor of Jamie Dimon as well as his disappointing mea culpa, and the status of free speech in China, with such transparency even flowing into the realm of maritime shipping data that China for some reason finds as a threat to its national security.??

However, some of his assessments here of the Taiwan Strait tensions are debatable - and predicting how imminent a war that could plunge the world into at the very least chaos and, at worst, annihilation, deserves at least some debate. I look at his commentary as it echoes many of the recent articles that many are writing when looking at the potential of an invasion by China of Taiwan, particularly in terms of in the inclusion of peoples' views, arguments about why an attack may be out of the question, and the role that Taiwan plays in all of this.

First of all, he's right to identify the possibility that much of the bellicose comments coming out of the CCP toward Taiwan may be simply a way to appease China's increasingly vocal nationalists. China's leader Xi Jinping has been very successful in leveraging China's economic growth - arguably the result of a greater embrace of a market approach and large amounts of foreign direct investment - to convince the Chinese people the future belongs to them and they are being led into glorious times. One could expect there will be vocal nationalists who recall only the "Century of Humiliation" and not the Taiping Rebellion before it nor the Great Leap Forward, Great Proletarian Cultural Revolution, or Tiananmen Square incident after it. Even those who are not as blindly patriotic may still believe that the CCP in the end will do the right thing and seek peaceful rather than violent reunification.

Comments and concerns by ordinary citizens in China's capital of Beijing aside, though, Xi has been a gambler-in-chief for much of his time at the dizzying heights of the party he moved himself into when he shoved Bo Xilai and others out of the way. And that is but one of the realities that leaders and generals from the U.S. and nations around Asia need to face.

Therefore, that reality goes along with another, equally important one: the CCP probably doesn't look for lessons or learnings from the foreign media or their journalists. In fact, the party has done a pretty good job of denying them visas or even making them disappear, as in the case of Marlow's colleague at Bloomberg, Haze Fan, who has been missing now for a year. When the party's top echelon does open a newspaper or visit a foreign media web site, they are usually looking for where and how it can refute what a journalist said, or for an added bonus, to figure out how it can chastise?them.

All the sound arguments, therefore, in the minds of the CCP's leaders about what China may suffer should an attack be carried out are likely to be ignored, at least if they are coming from the foreign media.

Another reality is that with such a locked-down, opaque system that is even murkier in China's zero-case COVID-19 policy and with so many foreign journalists either no longer in China or no longer able to enter China, what the "domestic" situation is like is hard to assess. It could be that the party believes the situation domestically is already dire, and if it does nothing, it could find itself fighting off the unfranchised hordes. Instead, CCP strategists may believe that only valiant action - in the form of an overseas conquest - will help shore up the masses' support of the party.

Such a belief would not be surprising; even democratic leaders acknowledge foreign adventures such as attacking another country or region can help take the minds of their citizens off the bleak prospects at home. Human nature compels us to believe with the victors come the spoils.

Meanwhile, Xi himself has taken a very big gamble with his grab for lifetime power. He would be na?ve to assume that there is no one in the party who may want to or is powerful enough to push him off the stage. Most authoritarian leaders who last for more than a few weeks understand if not accept the rule: he who lives by the sword, dies by the sword. As such, he likely knows that the knives are being sharpened in true Roman palace-intrigue style. He has cemented his control over almost every part of the party and government, especially the military and even public security forces. That should free him up to both invade overseas and crack down on dissenters at home, in order to ensure he shows he is the most powerful leader in Chinese history. He likely aims to be even more powerful than China's original great unifier, Qin Shi Huang, in the third century BC; remember, Qin did not lift millions out of poverty like Xi has boasted recently.

At the same time, while most American audiences may nod their heads in agreement when JPMorgan Chase & Co.'s CEO Jamie Dimon warns of "body bags" and a replay of the Vietnam War should Beijing decide it will tilt a Taiwan domino in its favor rather than let if fall toward Japan and America, U.S. policy makers should be under no illusions that Beijing listens to the CEO's comments the same way.

Beijing really only cares what Dimon says when he is either pledging investment in China or when he is not making a joke at the CCP's expense. Otherwise, the party has always believed the mistakes other barbarians and capitalists make out of hubris or ignorance have no connection with the party. Remember, Beijing has long believed it rather than Washington was on the right side of history. Whatever happened to the U.S. in Vietnam was bound to happen given the U.S.'s being capitalist and on the wrong side of history. The lesson from Vietnam is not overreach via invasion; it is the continued march by communists toward victory that the outcome of the Vietnam war displayed.

Of course, the Vietnam was more complicated than that, which is why riots erupted on U.S. college campuses during it and have led to huge debates in the classrooms and American society since. However, when a one-party state such as the one run by Beijing controls how history is written, one can forgive it if when its leaders have selective memories borne of edited histories.

Indeed, the very idea that debates are going on in China may not be as we envision them. Marlow may argue there appears to be a "delicate balancing act" leaders in Beijing are facing in terms of intimidating Taiwan and avoiding panic on the mainland. However, military experts even in liberal democracies will point out few military strategists would argue there is no need to play down rumors or media reports about a possible invasion in the works by its government. Believing a delicate balancing act exists could even be detrimental to preparing for a possible reality that there is no?debate anymore going on in the halls of power in Zhongnanhai: a decision not whether but when and how to attack may have already been made.

Moreover, that "plea" by a social media account affiliated with the official People's Liberation Army daily newspaper, Junzhengping, which Marlow refers to is important to consider as the outside world often looks careful at such white puffs of smoke escaping from behind the Great Firewall. He notes Junzhengping argues such "malicious fabrication" of possible troop mobilization could cause negative impact to the state, the military and society, as well as lead to severe consequences (ostensibly for those who spread such rumors).?

While it could be an attempt by the PLA to slow down the spread of rumors and be part of the party's delicate balancing act, it could also be more viewed as an attempt by the military to ensure the discussion - particularly on the downsides and possible horrors of a Taiwan invasion - does not get started before an attack is carried out. That would, yes, undermine the state, military and society should the people's fears have already turned them against such an attack. Moreover, history has shown us the party cares little about what the people "think" and is more concerned about what they "do." Otherwise, the party would have more than its 90 million members, which constitutes a mere seven percent of China's population, and they would let the people "write" and perhaps even "talk." We know, however, that for now and the foreseeable future, the only mouthpieces that will be empowered to speak will be of the state-owned variety.

While much of the above is debatable and even open for further debate from the readers here, Marlow does make, however, two more important mistakes in his characterization of Taiwan and its President, Tsai Ing-wen, as well as the efforts by the U.S. and its allies. On the former, he writes:

"Taiwan’s government warns regularly of China’s aggression, helping to boost international support and backing for President Tsai Ing-wen, who has taken a hard line with Beijing."

Tsai has not taken a "hard line" with Beijing; she has taken a sane line with the Chinese Communist Party. Taking a hard line with the party and giving it an excuse to attack would be more insane than showing resolve. And the frequency of the Taiwan government's warnings are given China's regular intrusions of Taiwan's air defense identification zone. They are not lobbying efforts on the part of Taipei.?

Meanwhile, on the latter group, he argues:

"The U.S. and its allies, meanwhile, have played up the possibility of a catastrophic war as they look to deter any aggression and make the case for bolstering defenses in the Indo-Pacific region."

When the autocratic leader of the world's largest nation stands atop a podium overlooking a square where his party's military was ordered to slaughter hundreds and perhaps thousands of its own young people and then warns heads will be smashed against its Great Wall should the world try to challenge his nation, it could be argued the U.S. and its allies have not "played up" the possibility of a catastrophic war. Rather, they have tried to help Beijing acknowledge the catastrophic consequences of such a war.

Earlier, U.S. President Joe Biden on two occasions voiced support for Taiwan in the face of an attack by China, thus breaking with the tradition of "strategic ambiguity." Whether or not Biden really "misspoke" about Washington's position on Taiwan is arguable. It would be understandable if he decided a new approach is needed as many have been suggesting strategic ambiguity may be dangerously vague to an increasingly tone-deaf and overconfident CCP. Rather than deter a possible attack on Taiwan, a lack of such clarity could instead create the mistaken perception by Beijing that an invasion of Taiwan will meet with either a muted or perhaps no response by America. My guess is Biden's decades of experience in foreign policy and his personal views on the threat China poses are prompting him to clarify rather than confuse. He knows he is prone to gaffes, so it is also doubtful his closest confidants have not warned him to not make any here.

More recently and within the matter of just a few days, former Japan Prime Minister Shinzo Abe and U.S. Secretary of State Antony Blinken have both warned China that such an attack on Taiwan would carry grave consequences, including severe sanctions being levied against it. An observation by U.S. Defense Secretary Lloyd Austin that the intrusions by China's PLA into Taiwan's air defense identification zone look a lot like rehearsals for an attack rather than simply intimidation of the island further added to the likelihood that the U.S. and Japan governments at the highest levels may be aware of what that 40-year-old Beijing resident may not: the possible existence of intelligence that indicates the CCP is much further ahead on an attack plan than previously thought. And while?both Abe and Blinken deserve respect for warning Beijing, we should remember all the tariffs levied on China have not modified its behavior but instead enraged it, while the pariah status it occupied after June 4, 1989 took years to remove. And that was only when the world realized "engagement" with China was more important for future globalization and outsourcing efforts than "containment" of a brutal, one-party state.?

That brings us to the debate over timing of a possible attack. Marlow includes important comments by Ian Easton, Shelly Rigger and Ryan Hass, as well as Dimon, that Beijing 40-year-old woman, Joanna, and another, 30-year-old woman surnamed Cai. It is up to the reader, apparently, to assess why Marlow chose that disparate sampling of expertise or why he didn't throw in a few other views not only from high-level government officials but also from more people in the street, including taxi drivers or hair dressers, as George Burns once suggested. The take-away obviously is: an invasion could either happen as early as next year (Easton), much later if at all (Rigger and Hass), or never (Cai).

With no disrespect intended to any of those esteemed analysts - they are all genuine experts on all this and their assessments I do take seriously - I will rely on any assessments voiced by Austin, Blinken, Biden and Tsai. Unfortunately, though, the most important assessment?of whether or not an attack on Taiwan is imminent comes from an untouchable leader - and hopefully one that is not out of touch with reality - in Beijing.