CaliToday (02/12/2025): A grim reality is emerging from behind the Great Wall, shattering the image of an unstoppable superpower. While the global arms industry enjoys a historic boom, China’s defense sector the crown jewel of President Xi Jinping’s modernization efforts is in freefall.
According to new data from the Stockholm International Peace Research Institute (SIPRI), revenue for China’s major arms producers plunged by 10% in 2024, a stark anomaly in a world rearming itself. This collapse is merely the tip of the iceberg, signaling a systemic rot that analysts say has turned the world’s second-largest economy into a "giant movie set" built on debt, fear, and illusion.
"Eating the Seeds": The Defense Sector Implosion
The numbers are startling. Norinco, the state-owned behemoth responsible for China’s tanks and missiles, saw its revenue plummet by 31% to just $14 billion. Meanwhile, AVIC, the aerospace giant, has reportedly ground much of its aircraft production to a halt.
The cause is not a lack of demand, but a paralyzing political purge. President Xi’s relentless "tigers and flies" anti-corruption campaign has swept through the military supply chain with devastating efficiency.
The Purge: The dragnet has ensnared top executives and generals, reaching as high as the Vice Chairman of the Central Military Commission.
The Freeze: With leadership decapitated and contracts under indefinite "review," the entire industrial base has frozen. Billions of dollars in projects intended to deliver super-missiles, aircraft carriers, and nuclear upgrades by 2027 are now in limbo.
"They are eating their own seeds," one analyst noted. "The very engine meant to project Chinese power has been dismantled by the paranoia of its own leadership."
The Wealth Illusion: High-Speed Trains to Nowhere
This military paralysis reflects a broader economic disintegration. On paper, China boasts a $17 trillion GDP, gleaming skylines, and a high-speed rail network that crisscrosses the continent. But beneath this veneer lies a population facing exhaustion and poverty.
The disparity is staggering:
Average Wealth: The average wealth of an adult in China is approximately $27,000. By comparison, the average is $107,000 in the UK and $120,000 in Germany.
The Savings Trap: Because the state provides almost no social safety net, terrified households save 35–40% of their income. A single serious illness or job loss can drag an entire family into destitution.
Real Estate and the "Ghost City" Phenomenon
For decades, China fueled its growth by pouring concrete. Now, that strategy has backfired. Much of the nation’s "wealth" is locked in ghost cities, useless infrastructure, and a real estate market that has shed 30–50% of its value.
While the state and crony elites hoard true assets, the average citizen holds depreciating apartments and stocks in zombie companies propped up by state banks. Youth unemployment has become so severe that the government has simply stopped publishing the real statistics.
A System Ruled by Fear, Not Markets
The crisis exposes the fundamental flaw of the Chinese model: it is a command economy running on political loyalty, not market logic.
The cycle of waste: In every Five-Year Plan, trillions are poured into whatever sector Beijing deems "strategic"—steel, ships, chips, EVs, and now missiles—regardless of profitability or demand.
The "Xi Effect": When political winds shift, or a leader is purged, entire industries can freeze overnight. Trillions of dollars in capital evaporate as if they never existed.
"China does not have a real market, real prices, or the rule of law," observers note. "It has loyalty to one man. A single frown from Xi Jinping can jam the gears of the entire machine."
The Verdict
The conclusion drawing from global financial monitors is stark: China is not rich. It is a stage set constructed of debt, with nuclear weapons hiding in the wings. As the cracks in the foundation spread faster than the state’s ability to cover them up, the world is witnessing not the rise of a dragon, but the slow-motion collapse of a Potemkin superpower.
Sources: Reuters, SIPRI