China’s Communist Party Prioritizes U.S. Competition Over Citizens’ Livelihoods, Echoing the Soviet Union

China‘s Economy on a Roller Coaster, Shaking and Sliding Downward (Graphic by People News)

[People News] An unusual phenomenon is currently unfolding in the Chinese economy. On one hand, exports of high-tech products, particularly in artificial intelligence and semiconductors, have surged, with exports of integrated circuits and similar products hitting record highs. On the other hand, domestic consumer spending and internal demand are experiencing a downturn, with residents' willingness to spend and the overall recovery of internal demand lagging behind industrial and export growth.

This situation is clearly linked to the so-called strategy of the Communist Party's leadership. As national power strengthens, Communist Party leader Xi Jinping is no longer willing to adopt a low-profile approach; instead, he aims to replace the United States as the world's guiding force. Beyond efforts to undermine the U.S. from within through tactics like unrestricted warfare, the Communist Party is also competing with the U.S. in areas such as technological innovation, economic and financial trade, geopolitical issues, and military security, particularly in recent years, without any pretense.

For instance, in the high-tech sector, particularly regarding semiconductors and chips, there are export controls and technological blockades concerning high-end manufacturing equipment, design software, and integrated circuits. There is also a struggle for dominance in artificial intelligence, quantum computing, biotechnology, and the establishment of 6G standards, as well as competition for control over critical minerals like rare earths and the green economy of new energy.

The Communist Party has officially announced plans to invest approximately 2 trillion yuan in building data centers across the country over the next five years. By 2025, China's total IT spending related to AI is projected to reach around 38 billion dollars, while leading companies such as ByteDance are also set to significantly increase their AI-related budgets to the scale of hundreds of billions.

Additionally, the Chinese Communist Party has invested hundreds of billions of yuan in policy funds to primarily support domestic wafer manufacturing, storage chips, AI computing power GPUs, and the entire semiconductor industry chain.

Recent data indicates that capital expenditures or investments related to artificial intelligence in China account for roughly 0.8% to 1% of GDP, while the overall digital economy's contribution to GDP has surpassed 43%.

On the military front, the Chinese Communist Party has enhanced its strategic deterrence and military presence in surrounding waters, including the Taiwan Strait and the South China Sea. The defense budget of the Chinese Communist Party has been on a steady rise each year.

For 2026, the defense expenditure budget is projected to be 1,909.561 billion yuan, reflecting a year-on-year increase of 7%, marking 11 consecutive years of single-digit growth. In 2025, the budget was 1,784.665 billion yuan, with a year-on-year increase of 7.2%. In 2024, it stood at 1,665.540 billion yuan, also showing a year-on-year increase of 7.2%. Although the Chinese Communist Party asserts that its military spending as a percentage of GDP is low, the lack of transparency in military expenditure data often leads external estimates of actual military spending to be significantly higher than official figures.

Meanwhile, the core fiscal expenditures on public welfare by the Chinese Communist Party (including education, healthcare, social security, etc.) account for approximately 10% to 15% of GDP, which is considerably lower than the 20% to 25% range seen in high-income/OECD countries. The skyrocketing housing prices that exceed the public's financial capacity, inadequate healthcare coverage, and exorbitant education costs are placing immense pressure on countless Chinese citizens.

Moreover, the current situation in China is characterized by over 300 million people engaged in flexible employment, tens of millions of college graduates who find themselves unemployed immediately after graduation, low-paid workers, foreign enterprises that are nearly fleeing, and a multitude of natural and man-made disasters. All of these factors contribute to a sense of lifelessness and despair in contemporary Chinese society.

In this context, officials from the ruling Chinese Communist Party proclaim 'people first,' yet their indifference allows the public to suffer and struggle.

This situation inevitably brings to mind a significant economic factor that contributed to the disintegration of the Soviet Union during the Cold War between the U.S. and the Soviet Union. During that period, the two superpowers engaged in a decades-long competition in military armaments, space exploration, and conventional weapons, which consumed vast resources.

Initially, they competed in nuclear weapons, progressing from atomic bombs to hydrogen bombs and eventually to intercontinental ballistic missiles. The number of nuclear warheads reached its peak in the 1980s, resulting in a 'balance of terror.'

Next, they entered a race in space. From the Soviet Union's launch of the first human-made satellite to the U.S. Apollo moon landing, advancements in space technology became a direct symbol of superiority between the regimes.

Lastly, they competed in conventional weapons and high technology. In the 1980s, the U.S. introduced the 'Star Wars program,' extending the confrontation into the high-tech domain of space defense. The objective was to develop laser systems in space as part of a missile defense strategy to destroy enemy nuclear warheads before they re-entered the atmosphere.

In the competition in the aforementioned areas, both the United States and the Soviet Union invested enormous sums of money. Over the decades of the Cold War, the U.S. defense budget rose from approximately $12.4 billion in 1950 to an annual military expenditure nearing or exceeding $290 billion during the peak of the Reagan administration's 'Star Wars' initiative and arms race, totaling hundreds of billions of dollars. The Soviet Union, on the other hand, had to allocate more than 15% or even 20% of its national economy to military spending.

Thanks to its robust economic foundation, unmatched market economy scale, and technological advantages, the U.S. was able to sustain a large military budget that, while it did create some fiscal deficits, did not lead to economic collapse. Instead, military technology spurred the growth of the civilian high-tech industry. In contrast, the Soviet Union's excessive emphasis on heavy industry and the military-industrial complex resulted in an imbalanced economic structure, leading to domestic shortages, economic stagnation, and declining living standards, ultimately collapsing under the weight of high military expenditures.

Today, the Chinese Communist Party (CCP), which aims to rival the U.S. in high technology, particularly in the digital economy, has poured vast amounts of money into military spending, yet has made little progress in improving the livelihoods of its citizens. The current economic imbalance and the decline in living standards are direct consequences of this approach.

As the general populace grows skeptical of the CCP's grand narratives and focuses more on their daily needs for food, clothing, housing, and transportation, one must wonder how much longer the CCP regime can sustain itself. The CCP, which has already been internally abandoned by countless Chinese citizens, appears to be following in the footsteps of the Soviet Union, heading towards disintegration.

(First published in People News) △