Beijing is escalating its effort to scuttle a Taiwan visit by House Speaker Nancy Pelosi in the coming days, and the threatening rhetoric from the Communist Party makes more sense when you consider the domestic backdrop. The Chinese economy looks increasingly brittle, so it would no great surprise if President Xi Jinping resorts to nationalist brinkmanship as a distraction.
The basic story is slowing economic growth. Beijing has set a GDP growth target of 5.5% in 2022, which is modest by historical standards. Even the Party now seems to admit the country is not going to hit that target, at least not honestly, as growth was only 2.5% in the first half. For an economy of China’s size, with hundreds of millions of citizens still in poverty, this is the functional equivalent of a recession.