Commentary
Much of the world lives with the outdated stereotype of a China that is a rising economic power, with the military might to attack not only neighboring Taiwan but the United States and other countries.
The reality, which is only slowly and belatedly reaching audiences and governments around the world, is that China is economically on the brink of disaster; its leadership is the subject of an internal war within the Chinese Communist Party (CCP); and a military without real leadership or sustainable capability.
The Chinese economy is still playing in an entirely artificial monetary world, in which the yuan (renminbi) is, in normal practice, untradeable on the global market, making Beijing heavily dependent on foreign exchange earnings for which there are no reliable statistics.
The yuan is not a free currency; it is a fiat currency given a more-or-less fixed valuation by Beijing and is used heavily only in transactions involving Chinese aid investments or Belt and Road Initiative projects. For example, recent demands that Australian mineral exporter BHP accept yuan for iron ore shipments were rejected outright.
Even the stability of the U.S. dollar, while far stronger than the yuan, must be viewed in light of inflation, which has driven the dollar’s value rapidly downward in terms of the price of gold.
The U.S. dollar, although unmatched in strength by any other major currency, is extremely fragile.
In February 1920, the price of gold was $20.61 per troy ounce; on Nov. 6, 2026, the price was $4,070 per ounce (it had gone to $5,379 on Jan. 29, 2026). This does not represent the soaring value of gold; it represents the plunging value of the dollar (and many other currencies).
This is the real measure of the inflation devouring social stability in most of the world, including the United States, and it is this—arguably more than any other factor—that turned the political tide against President Donald Trump’s party, the Republicans, in the midterm elections. For American voters, the United States’ débâcle in its prosecution of the 2026 war against Iran was a secondary issue.
But as both powers posture in a polite stand-off in late 2026, the reality is that China’s position has been further compromised by the reality—unrecognized by the West—that the Chinese military is without viable leadership across the board. It is unlikely to be able to even consider a realistic military adventure against Taiwan (officially the Republic of China) in the coming year or decade.
In all of this, two major strategic events almost overlapped—and certainly interacted: the fifth plenary session of the 20th CCP Central Committee (Oct. 26–29) and the U.S. midterm congressional and gubernatorial elections (Nov. 3).
They need to be analyzed in tandem, because they represented significant domestic turning points for each of the two largest military powers, each committed to constraining or defeating the other. Each, however, has an interest in ensuring that its rival does not collapse precipitously, given the levels of interdependence between them. And yet each must navigate a delicate position.
The Sept. 23–25 state visit to the United States by Chinese leader Xi Jinping was an exercise that highlighted the symmetry of the United States and China’s efforts to portray the situation between both countries as “business as usual” to avoid the prospect of a further erosion of bilateral relations and the strategic balance.
The official comments following the fifth plenary session of the CCP Central Committee in Beijing were also designed to project such a view, and that disruptions in the People’s Liberation Army (PLA) were merely the signs of an anti-corruption purge by Xi.
That is as big a fabrication as any of the routine distortions of official statistics.
Xi has not conducted the majority of the purges, and certainly not against his own appointees. His opponents within the reformist and old-guard sections of the CCP have eliminated the “Xi loyalists.” Xi has achieved only one true masterstroke against his opponents: the detention (and possible execution) of the vice-chairman of the Central Military Commission, Gen. Zhang Youxia, and Gen. Liu Zhenli, chief of staff of the CMC’s Joint Staff Department, in January.
Zhang opposed Xi on the matter of the proposed Taiwan invasion, and so did Liu. And both were actual military generals, not political commissars with the rank of general.
About two years ago, there were some 45 full generals in the PLA. Today, there are only six, and three are political commissars—for example, not combat soldiers—and the other three are PLA Air Force generals. Even though one of those PLAAF generals commands the vital Eastern Theater Command (facing Taiwan and the Pacific), the Air Force is not authorized to command a major combined-arms operation such as an invasion of Taiwan.
There are no Army full generals to be seen.
So, then, who would the most senior Army, or ground force, officer likely to be called on in a military emergency? It would be the lieutenant general holding the position of chief of staff of the CMC. Gen. Liu Zhenli has not been replaced, so his former deputy—Lt. Gen. Zhu Chuansheng—appears to be managing the CMC Joint Staff Department without any specific nomination that he is “acting chief” or other indication of his status. He is referred to as the acting chief, but this is a de facto situation.
What we witnessed during Xi’s state visit to Washington and the fifth plenary session was an attempt to normalize the transition of power, which has been the subject of Beijing’s power play for at least the past two years.
Xi has reportedly agreed to step down under pressure during the past few years, but, when the opportunity arose to regain advantage, has always gone back on those agreements. He could do so again, although he now looks stressed and aged. Reports of a further series of mini-strokes—or even one such event—at the recent BRICS summit in New Delhi do not seem fabricated, although the extent of such episodes is unknown.
Chinese officials denied the claim, but the Indian media widely reported it at the time, and video coverage of the summit’s opening showed strong visual evidence that Xi suffered some kind of incident.
This could have been a moment when Trump could have pressed the U.S. position to constrain China further, and, indeed, during the first weeks of November, the U.S. government was pushing Beijing to honor commitments on trade in food and rare earths. But much of the air has been removed from the U.S. position, given the electoral setback the Republican Party suffered in the midterm elections.
This election is likely to have a stultifying impact on the United States’ apparent leadership for at least the next six years, and possibly more. From the U.S. standpoint, regardless of what happens in Europe, it could remain in domestic political chaos while China continues its own downward strategic spiral without any help from Washington. That would still leave the United States in a dominant global position, unless the domestic situation and the dollar’s prestige collapse.
This is an era of coalescing strategic trends, and nothing is guaranteed.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.
