Deep Dive
The Oil Crisis Nobody Expected (Except China)
In February, the Iran-Israel war closed shipping lanes and smashed refineries. Russia and Gulf states both cratered output—Russia via Ukrainian strikes, the Gulf states by choice to support geopolitical allies. Within months, diesel prices spiked 35-40% across Europe and 65% in America. But China barely moved. The reason: two decades of deliberate strategic redundancy. China built massive state-controlled reserves starting in the early 2000s, anticipating exactly this kind of supply shock. When Hormuz choked, China simply pulled from reserves and cut imports by 40%. The move was so coordinated—halting exports to neighbors, suspending non-essential purchases—that global prices never spiked the way they should have. Europe and America, caught without reserves or diversified refining capacity, are now facing diesel rationing that cascades into agriculture, logistics, and manufacturing costs. Hungary, Poland, and Germany are all imposing price caps, but caps don't create fuel. This is a case study in how state planning, when executed competently over 20 years, can absorb shocks that destroy liberal economies.
Trump's 35-Day Gambit and the Rare Earths Checkmate
On January 20, 2025, Trump announced 145% tariffs on Chinese goods, calculated to make trade physically impossible and force Beijing to capitulate on agricultural purchases and tech transfer demands. China did not blink. The regime told Trump: we'll absorb the loss, stop exporting to America, and watch your economy crack. For 35 days, both sides escalated. Then Trump's advisors explained the real problem: China controls 80-90% of rare earth elements and the magnets needed for F-35 avionics, radar, and AI chips. Without those imports, U.S. military production grinds to a halt within months. Trump caved. By mid-February, a ceasefire was announced at much lower tariff levels, with functional trade restored. Salat notes this exposed American bluffing—the U.S. can't actually afford a trade war with China because American military superiority depends on Chinese supply chains. The irony: Trump thought leverage was negotiating, but leverage is structural dependency.
How China Built a System That Doesn't Break
China's model doesn't fit Western categories—it's neither communist nor capitalist. The Communist Party (96 million members) remains sovereign and uses five-year plans, but not as Soviet production quotas. Instead, plans forecast demand and signal to investors where the state will subsidize and guarantee returns, then unleashes brutal competition to execute. Private firms dominate output, but state firms control oil, telecom, and defense. The party places cells inside every large company—Chinese and foreign—with veto power over hiring and strategy, yet these cells often lobby for the company against the center. It's a hybrid where centralization and decentralization coexist. The result: China built 50,000km of high-speed rail in 15 years, produces electric vehicles (BYD, CATL) that survive the world's harshest competition, and maintains growth through cycles where Western economies crater. Salat emphasizes: this isn't because Chinese people don't want democracy; it's that the state and society aren't viewed as separate enemies (as in Europe), but as an organic whole like the human body, where officials serve collective health. This belief system makes citizens accept state surveillance and control as legitimate when the government actually delivers.
The Party Stays in Power by Listening (Selectively)
China's Communist Party regime survives because it monitors and responds to public grievance—not through voting, but through petitions, online complaint channels, local courts, and close observation of protest patterns. When corruption swelled in the 2000s, local officials were looting at scales that destabilized legitimacy; the center responded with Xi Jinping's anti-corruption campaign that imprisoned, sidelined, or executed thousands of cadres. It was brutal and political, but it was responsive. When zero-COVID measures collapsed under omicron, the regime reversed them. The catches: reversals come late (the one-child policy took decades to repeal despite obvious demographic failure), because reversing requires dismantling massive state bureaucracies with vested interests. Also, the system censors collective organizing ruthlessly—it allows grievance, but forbids coordination that might challenge the party monopoly. Salat also notes that information flows upward only if officials feel safe reporting bad news; during COVID's early days in Wuhan, local leaders hid the outbreak from Beijing because reporting would look bad before a party congress. This created a global pandemic. The system is responsive and efficient, but fragile to catastrophic errors precisely because it's authoritarian.
Taiwan and the Weak U.S. Commitment
Trump and Xi met this week. Taiwan is the flashpoint. Trump told Fox News he wouldn't send 9,500 miles of American troops for Taiwan but would for Iran—a throwaway remark Taipei read as capitulation. The island is functionally independent, produces 60% of the world's semiconductors, but China insists it's a breakaway province. The real fear in Taipei: Trump might trade recognition of Chinese sovereignty for trade concessions, leaving Taiwan with older weapons and reduced U.S. commitment. The Partizan sent a correspondent to Taiwan, which currently faces no day-to-day war panic—night markets function, startup founders pitch their Kurtos Kalacs franchises—but strategists are deeply unsettled. They know Trump views Taiwan as a negotiating chip. Biden committed to military defense; Trump says the commitment is negotiable. Without clarity from Washington, Beijing can wait. China doesn't need to invade; it just needs Washington to abandon the security guarantee, then the political leverage becomes totalizing.