Private real estate developers like now-bankrupt Evergrande and Country Garden borrowed from trust companies and banks to build homes and office buildings ― and many projects became white elephant projects both in China’s ghost cities and nearby Asia ― for example, Forest City in the straits between Malaysia and Singapore. They also borrowed from prospective homeowners. Now China has the paradox of real estate development companies with unsold apartments in ghost cities and unable to deliver prepaid-for homes in places where housing is needed. Prospective new buyers are wary, driving down real estate values, and municipal land sales and threatening the resources of municipal governments need to shore up LGFVs. Development companies borrowed from China’s shadow banking system ― trust companies ― and ordinary banks. Trust companies sell exotic products to wealthier clients by promising outsized returns and lent that money to real estate developers and invested in stocks, commodities and other nontransparent assets. Prominent among them, Zhongrong has missed payments to investors. China’s banks have about half of their assets tied up in local government debt and various forms of property loans ― credit to real estate developers and trust companies as well as plain-vanilla mortgages. The biggest chunks are mortgages, but many of those won’t get paid if promised homes are not delivered or real estate loses its value. Evergrande’s bankruptcy potentially strands 1.6 million people who have paid for undelivered homes, and housing prices in major cities have fallen by double digits since Evergrande missed bond payments in 2021.

The Biden administration is getting smug and too worried about China’s economy. China’s miracle growth over the two decades preceding COVID-19 was greatly aided by three sets of forces: the liberalization of land development and accelerated urbanization and homeownership, entry into the World Trade Organization and resulting surges in foreign investment, and industrial policies designed to create world leaders in next-generation industries. All were built on financial houses of cards. Municipal governments created local government financing vehicles, known as LGFVs, that borrow to build roads, factories, utilities, airports and other infrastructure. That debt doesn’t count against central government limits on provincial and local authorities. LGFVs could be counted on to power up demand, investment and growth whenever the national economy slowed. With their debt carrying an implicit government guarantee, they did not always borrow and invest prudently, have required operating subsidies from local governments and amassed $9 trillion in debt - about half of China’s gross domestic product. Too often, their projects did not generate the revenue anticipated, and many LGFVs are teetering on collapse. Beijing has reportedly approved provincial governments issuing $206 billion in new debt to help prop them up, but that would only buy some time and exacerbate local governments’ budget problems. The latter have been getting a lot of their revenue by selling land to developers, but housing prices have been falling in the wake of COVID-19, slower growth, and fear that homebuilders will collapse and not deliver promised new residences.

Research by Siddharth Kara of the Harvard Kennedy School of Government reveals that cobalt mining in Congo involves “slavery, child labor, forced labor, debt bondage, human trafficking, hazardous and toxic working conditions, pathetic wages, injury and death, and incalculable environmental harm.” How did China manage to achieve its commanding position in Congo and a long list of other African countries? Largely by rewarding the host countries’ elites in ways in which Americans are not permitted under U.S. law. Beijing’s apologists point out that roads, bridges, ports, government buildings, and other infrastructure are being built in Africa under China’s Belt and Road Initiative. True, but these projects are overseen by Chinese managers using Chinese engineers and even Chinese labor. Skills are rarely transferred to the local population. Financing often involves large loans that can be difficult for host countries to repay. Beijing may then make demands to settle the account. Control of far-flung ports is particularly useful given that China now has the world’s largest navy (as a new report from the Foundation for Defense of Democracies details). These and other manifestations of contemporary colonialism have not received the attention they deserve from international organizations, the major media, or university departments of “postcolonial studies.” Many Europeans and Americans still fail to see the “scramblers” for what they are: rapacious neocolonialists. Western policymakers should assign themselves the task of developing new strategies to help Africans become free and independent of these evil empires.

Battling jihadis is apparently not Wagner’s strong suit. Fighters linked to the Islamic State have doubled the size of the territory they control in central Mali, according to a U.N. report. Wagner troops have been a major force in the Central African Republic since 2018. Among their alleged crimes: raping and trafficking women and children and killing three Russian journalists who were attempting to report on the group’s exploitation of “blood diamonds.” In more than a dozen African countries, Wagner’s deal is straightforward: They provide the dictator with security (no need to worry about your palace guards) and, in exchange, they help themselves to the country’s natural resources. Regimes hosting Wagner are also obliged to side with Russia at the U.N. and other international forums. In Sudan, where a civil war has been underway since April, Wagnerians are reportedly assisting the Rapid Support Forces led by Mohamed Hamdan Dagalo against Sudan’s military, led by Gen. Abdel Fattah al-Burhan. Gold is one of the resources Wagner takes from Sudan. The most successful imperialist in Africa would appear to be Xi Jinping, the powerful ruler of China. Mr. Xi is less interested in exporting communism to Africa than in importing mineral wealth from Africa. Consider the Democratic Republic of Congo, where more than 70% of the world’s cobalt is produced. Roughly 90% of that valuable metal is sent to China, where it’s processed and refined (largely utilizing coal as an energy source). The cobalt ends up in the batteries that propel electric vehicles sold in China, Europe and the U.S.

In the 19th century, European empires carved the African continent into colonies they could exploit. A 21st-century scramble for Africa is now underway ― and it’s no less exploitative. The neo-imperialists are Chinese Communists, Russia nationalists, and Islamists. Increasing instability in too many African countries is making it easy for them. Since 2017, there have been 17 military coups in the sub-Saharan region. The most recent occurred in Gabon, a country that had been ruled ― or, more precisely, misruled ― by one family since 1967. In Niger, which possesses 7.5% of the world’s uranium, President Mohamed Bazoum was overthrown by the head of his presidential guard. Mr. Bazoum had been democratically elected and was partnering with the U.S. and France to combat groups affiliated with al Qaeda, the Islamic State, and Iran ― rivals with the same goal: establishing a new Islamic empire. About 1,000 elite U.S. troops are in Niger. They operate a $110 million drone base. The future of that deployment is now in doubt. According to the Middle East Media Research Institute, Tehran’s supporters and proxies are “celebrating” Africa’s coups, interpreting them as evidence of waning Western influence in favor of Moscow and Beijing, allies of the Iranian regime. A Telegram channel representing Shia militias in Iraq claimed that the “blessed military coup by the people and army of Gabon” demonstrates that the West is “exhausted” and being “expelled” from Africa. French troops were indeed expelled from Mali after a 2021 coup. They were soon replaced by the Wagner Group.

The result is that all of the former communist countries in Central and Eastern Europe, including the Baltics, which were part of the Soviet Union, are now functioning free-market democracies with rising per capita incomes. Most have become members of the European Union, fully integrating their economies with Western Europe. After the fall of the Soviet Union, it might have been possible to also set a course for Russia, Belarus and Ukraine to become part of the EU, with full economic integration. If that had happened, there would be no use for NATO in at least its present form, and that tension would be gone. Russia’s actions in Ukraine can be at least partially explained by its fear of invasion from the West by playing on what now seems an irrational fear based on the history of invasions from the Swedes, the French (Napoleon burned Moscow) and the British, as well as successive German invasions. Remember, the EU got its start by the forming of the European Coal and Steel Community in 1951 as a way of integrating the European industrial economies so they could no longer wage war on one another. The Russians thought they had an agreement that NATO would not expand beyond Germany when Mikhail Gorbachev acquiesced to the former East Germany’s becoming part of Germany and hence part of the EU and NATO. Given the lack of democratic traditions and a real market economy, as well as a high level of corruption, Russia, Belarus and Ukraine would have needed much more support to make the transition to full and equal European countries. But the cost to the rest of the EU, the U.S., and the rest of the world would clearly have been far less than the current mess and uncertainty.

the borders of Ukraine were guaranteed by Russia, the United Kingdom and the U.S. as part of the Budapest Memorandum of 1994. When communist Central and Eastern Europe started breaking up in 1989, there was no plan from the Bush administration or the European leaders regarding what to do. Although there was active covert support for the democratic forces in the “captive nations” during the Reagan administration, the collapse of communism caught most governments by surprise. Unlike at the end of WWII, there was no formal surrender by the Soviet Union and the leaders of the Central and Eastern European countries. In essence, the communist leaders just walked away from the disasters they had caused, turning the keys over to the new democratic forces with the hope they would not be shot. Western governments and nongovernmental organizations rushed in with largely uncoordinated advice and aid. The absence of a master plan for Central and Eastern Europe actually worked out rather well. Those of us on the ground with some experience would see particular needs and do our best to fill them. I served as co-chairman of the Bulgarian economic reform, was given an almost free hand in determining what experts and resources were needed. U.S. businesses, law firms, think tanks and others volunteered and often paid for their own expert personnel to support our efforts. Even the U.S. Agency for International Development dropped many of its normal paperwork requirements, enabling us to move very quickly in taking care of staff and transportation expenses.

Why did Vladimir Putin’s Russia invade Ukraine? Ukraine posed no threat to Russia, and it was smaller and poorer. The Russians and Ukrainians shared some history, ethnic background and religion. Many Ukrainians used Russian as a first or second language. To the extent that Russia wanted Ukrainian wheat or coal, it would have been much cheaper to buy them rather than wage war. Was there anything that the U.S. and Europeans could have done differently when socialism crashed in Central and Eastern Europe and the Soviet Union broke up in the 1989-91 period that would have likely prevented the Ukraine war? About half of Ukraine, like Poland, has been part of Russia off and on over the last few hundred years. The Europeans had engaged in countless wars over territory from the beginning of recorded time. At the end of World War Ⅰ, the map of Europe was redrawn to give most Europeans a “homeland” to end wars over territory. The Germans and some others felt shortchanged, and once they had the chance to rebuild their armies, Hitler took them to war to conquer Europe ― which did not work out terribly well for the Germans. So once again, after World War Ⅱ, the victorious allies redrew the map of Europe. Poland was moved west to punish the Germans and to make Stalin happy. Ukraine, home to the largest tank battles of the war, was once again forced to be part of the Soviet Union. With the fall and breakup of the Soviet Union in 1991, Ukraine, along with Russia, was left as an independent nuclear country. The Ukrainians were broke and thus agreed in 1994 to give up their nuclear weapons in exchange for a large payment from the U.S. and others and security guarantees.

Mao Zedong became one of the last century’s most powerful dictators by completely transforming Chinese society through the systematic use of violence, coercion, and aggressive propaganda. His method was unique and so ruthlessly effective that it was codified by historians and political scholars as Maoism. Today, a new kind of Maoism is developing on the American left, and it is a direct threat to the American traditions of individual rights, the rule of law, the Constitution and personal freedom. The Maoist levels of violence and mass murder have not occurred here, but the patterns of psychological coercion and propaganda are thriving. Maoist-style groupthink and forced confession, and coercion have been spreading through our top universities and the corporate news media for decades. They have recently permeated our governmental bureaucracies, military, and even large corporations. Weaponizing class through critical class theory and other pseudo - scholarly propaganda allows the new Maoists to designate what classes are approved or blacklisted ― then label who belongs to what class on their terms. You can see new Maoist patterns in America through the left’s radicalization of youth, destruction of history, and widespread use of propaganda. Recall the objective of Mao’s Cultural Revolution (in addition to eliminating his opposition) and the aim of the Red Guards was to destroy the ‘four olds’: old ideas, old customs, old habits, and old culture.

These measures induced volatility, which has made Chinese companies wary of hiring. The interruption of education due to the pandemic has hindered students from securing internships that tra ditionally lead to job offers. This disrupted job market threatens to stifle economic recovery and growth. China’s housing and credit market bubble, once considered impervious, is showing alarming signs of deflation. The housing market’s struggles are magnified by millions of unoccupied dwellings, reflecting the unsustainable expansion of real estate. Housing starts have plummeted, and local governments are grappling with financial difficulties due to slumping land sales. These red flags highlight the potential systemic risks of the housing market’s instability. The Chinese economy’s descent into deflation is particularly concerning, given its reliance on speculative investments that fuel debt asset price bubbles. The erosion of purchasing power and decreased consumer spending pose severe threats to economic stability, underscoring the gap between appearance and reality. While China’s economic challenges have global implications, they also present opportunities. A struggling Chinese economy could lead to falling export prices, providing much-needed relief from inflation pressures. Economic deterioration across various sectors, points to an economy on the brink. The bursting of the housing and credit market bubble, coupled with mounting defaults, paints a stark picture of China’s vulnerability. China’s journey from economic powerhouse to paper tiger is a cautionary tale about the perils of unsustainable growth and the importance of acknowledging underlying economic challenges.