Real estate and demographic trends point to the possibility of growing domestic discontent. In many ways, China’s upper middle class has enjoyed a sort of social contract with the Chinese government. That is to say, in return for material comfort and growing wealth, China’s upper middle class has acquiesced to the Communist Party of China (CCP) and its leader Xi Jinping. But if this group feels the sting of a real estate decline and/or other economic hardship, the party’s legitimacy could slowly erode among this key demographic.
What might the Chinese government do to distract from domestic discontent? Remember the 1997 movie Wag the Dog? Creating an external conflict was seen as the answer to domestic political problems. Based on what I’ve seen, especially during a recent trip to Beijing, I think the United States is looming as Public Enemy Number One for Chinese citizens. The amount of anti-American sentiment I saw on the ground was frankly shocking. China blames the United States for its protectionist policies, Biden’s Inflation Reduction Act, the Federal Reserve’s setting of interest rates, and so on.
In sum, if China’s domestic economy looks worse, China-US tensions could escalate to new uncomfortable heights, with spillover effects felt all over the world.
2. Russia or Ukraine? Who will emerge as the winner?
On 20 February, Russia’s latest invasion of Ukraine will turn two years old. What was supposed to be a quick invasion has some developing “Ukraine fatigue”, as the Financial Times put it. But I think leaders should stay sharply aware of the likelihood of a decisive turn this year, even as time seems to drag on.
Some military analysts I’m following compare the war in Ukraine now with what happened near the end of World War I. That was when neither of the two sides were gaining nor giving up much territory. But the lack of movement wasn’t for their lack of military efforts: the pressure on the fronts was so high that when one side gave, it was like a dam bursting. And then World War I was over.
In Ukraine, accumulated pressure from both sides is intense now and running through both Russian and Ukrainian resources. Because of this accumulated pressure, a resolution in 2024 is looking increasingly likely, more likely than it was in 2023. Of course, what happens with China has some bearing, as China is an important ally and support for Russia. On top of that, what happens in the United States matters, as its military support (along with Europe’s) is crucial for Ukraine. While it’s hard to predict the war’s winner now, it’s relevant to watch both China and the US.
3. Trump or Biden? Who will lead the United States starting January 2025?
In November 2024, US voters go to the ballot box to decide who will be their next leader, and thus the leader of one of the world’s top superpowers, with repercussions to be felt all over.