China's aerospace disaster: The dream of catching up with the U.S. is just an illusion

Vanka loses $28 billion Shenzhen metro dragged down. SAS exits China. Local governments struggle amid economic collapse. Peng Liyuan reportedly cancelled her South Korea visit amid deep involvement in military bribery. Xi's extreme rules kidnap officials, a dangerous signal of governance. China's anesthetic fish scandal exposed, sparking widespread. Online outrage. Return capsule hit by space debris. Three Chinese astronauts stranded in orbit. Welcome aboard today's episode of Decoding China, your trusted source for essential insights and timely analysis. Vanka loses $28 billion Shenzhen metro dragged down. SAS exits China. Local governments struggle amid economic collapse. China's economic miracle is unraveling. And this time, no amount of patriotic slogans can hide the cracks. Once mighty corporations are hemorrhaging cash. Industrial towns are hollowing out. And even loyal foreign partners are heading for the exits. The facade of strength is fading fast. Real estate was once China's proud engine of growth. Now it's the nation's heaviest anchor. Vanka, the country's former model developer, reported a staggering $3.9 billion loss in the first three quarters of 2025, with revenue down 27% and profit margins sinking below zero. The cause is textbook over-leverage. With $50 billion in interest-bearing debt and only $9 billion in cash, the company faces a wave of maturing loans next year that could trigger a technical default. Its biggest shareholder, the state-owned Shenzhen metro, has already lent tens of billions to keep Vanka afloat. But it, too, is bleeding red ink, losing $4.6 billion last year and erasing five years of gains. Economists warn that this is not rescue, but life support. The deeper problem lies in China's entire housing model, an addiction to borrowed money, by builders, buyers and politically connected speculators alike. Whether Beijing chooses to save Vanka or let it fall, ordinary citizens will foot the bill. Subway fares in Shenzhen have already risen, fueling anger among workers who see their paychecks sacrificed to prop up a dying empire. Down at street level, the picture is equally grim. In Guangzhou's garment villages, once roaring hubs of low-cost manufacturing, silence now reigns. Hundreds of factories have shuttered. Tens of thousands of workers have no orders. We used to pick our jobs, one migrant worker said. Now the jobs pick us. Daily wages have dropped by nearly half, while rent and food prices stay high. Many are giving up and heading home, or crossing the border to Vietnam, where factories still hum. What was once the beating heart of China's export economy is turning into a ghost town. Yet while workers struggle to find a day's wage, officials in Shanghai are staging the annual China International Import Expo, a lavish fair designed to showcase Beijing's shared mega-market. The slogan promises that China will become the world's biggest buyer. But trade data tells another story. The country's surplus is expected to top $1 trillion this year, meaning it sells far more than it buys. Exports to the United States have plunged nearly 30 percent, while sales to Africa and Southeast Asia surge, often at loss-making prices. To Western observers, the expo looks less like an economic event and more like political theater. Then came another blow to confidence, the quiet exit of SAS, the American analytics giant that had operated in China for over two decades. Known for its integrity and steady employment, SAS abruptly announced it would shut down its direct Chinese business and lay off 400 workers. It joins IBM, Dell, and Micron in shrinking their China presence, citing global optimization, but clearly retreating from a country now seen as a regulatory and geopolitical minefield. If even such a conservative, data-driven firm decides to leave, analysts say, it signals that China's business climate has crossed a point of no return. At the same time, local governments desperate for cash are turning to bizarre financing schemes. Under a new three-capital, three-transformation initiative, cities are securitizing anything they can. From trees and carbon credits to the sludge at the bottom of reservoirs. In one case, 11 million cubic meters of mud were auctioned for over $110 million. The deals generate short-term revenue, but economists warn they merely shift debt forward while leaving taxpayers and the environment to pick up the tab. From collapsing real estate gestants to ghost factories and fleeing investors, the story of China's economy today is one of survival, not revival. Behind every upbeat speech about openness or innovation lies the same unspoken truth. The old model is broken, and no one knows what will replace it. Peng Liyuan reportedly canceled her South Korea visit amid deep involvement in military bribery. A sudden cancellation of a first lady's foreign appearance has cracked open one of Beijing's best-kept secrets, the hidden influence of China's first lady in the military, and what that reveals about the shifting power of China's leader. In late October 2025, China's top leader Xi Jinping attended the APEC summit in South Korea. What raised eyebrows was the conspicuous absence of his wife, Peng Liyuan, originally slated to accompany him, according to Korean media and diplomatic sources. That last-minute change hinted at something far more serious than mere scheduling. According to a Korean finance outlet, Beijing notified Seoul that Peng would join Xi on his Gyeongju area visit. Her inclusion prompted Beijing to downgrade Xi's hotel from a luxury five-star to a four-star venue, reflecting the logistical demands of a first lady delegation. Yet suddenly, Xi was sidelined. For analysts, this was a clear signal Xi's once-unshakable grip may be loosening. Observers already noted that during earlier overseas trips this year, to Southeast Asia in March, to Russia in May, Peng did not accompany him. The timing of her removal from the Korean visit, soon after the CCP's fourth plenum, suggested that internal power struggles were deepening behind the polished diplomatic facade. Behind that cancellation lies an even more startling revelation— Peng's unexpected role in China's military system. Since at least 2016, according to court documents from former senior officer Miao Hua, Peng reportedly became director of the Cadre Evaluation Committee under China's powerful Central Military Commission—CMC— the body that governs the People's Liberation Army. The committee assesses senior officers' political loyalty, military capability, and moral conduct. Miao claims Peng wielded decisive influence. Those major bribes were all aimed at Zhong Xiaojun and Peng Liyuan because they had real power, he stated. Zhong Xiaojun is known as Xi's longtime military secretary. Together, they emerge in the documents as the twin gatekeepers of China's senior officer corps. Peng's military credentials are well-established. Once a major general in the PLA's Cultural Troop, she served as dean of the PLA Academy of Art until 2017. Analysts have long speculated Xi moved into a behind-the-scenes military role, but until now, the details remained opaque. Recent social media images and court texts suggest she served in a formal evaluation capacity behind the scenes. An editor with years of experience in Beijing told Radio Free Asia that Peng entered a CMC subordinate body and helped assess generals' careers— a role that is very powerful. These disclosures yield a double-edged portrait— one of Xi trying to reinforce his control by placing a trusted family member at the heart of military promotions, and another of potential vulnerability that the system he created may be unraveling, exposing him to the very factional battles he had sought to suppress. The pattern of senior military leaders being purged— nine were announced by the Ministry of Defense in October 2025— speaks to the centrality of loyalty in Xi's China. According to Miao, his own office was only an executor of instructions given by Zhong and overseen by Peng. Material and personnel went to the evaluation committee for final decisions. The implications are profound. Military promotions are the clearest test of power in China's one-party state. If Peng and Zhong are seen as the real filters of advancement, then the absence of Peng in a high-visibility diplomatic mission suggests her influence might be in question— and, by extension, Xi's too. The report of bribes aimed at Peng suggests that even in the opaque corridors of the military, her power was both feared and courted. Inside the system, it mattered less that she was an internationally known figure or performer, and more that she held the decisive say on who rose and who fell in the ranks of generals. What remains unclear, however, is whether the revelations represent a deliberate effort to expose Xi's weakening influence, a power play within the military elite, or simply a leak from a disgruntled official. The veracity of Miao's claims cannot be independently verified, nor has the CCP publicly acknowledged Peng's role on the evaluation committee. Yet the mix of a cancelled First Lady trip, leaked military evaluation documents, and a fresh round of military expulsions creates a compelling pattern— one that suggests Xi's control may no longer be as absolute as it once appeared. In that sense, the story is as much about China's future as it is about its present. The leadership transitions, the reshuffling of military loyalties, and the sidelining of a figure once presumed untouchable all point to a system in flux. If Peng Liwan's military role is real, and her absence from Xi's trip is meaningful, then what we are witnessing may be the early signs of a new power architecture inside China's ruling apparatus— one in which even those closest to the center can find themselves on the margins. Xi's Extreme Rules Kidnap Officials— A Dangerous Signal of Governance Imagine boarding what you thought was a golden ticket to stability, only to find yourself shackled to a vessel careening toward disaster. That's the grim reality for millions of Chinese civil servants under Xi Jinping, as new rules slam the door on resignation and tighten the noose on personal freedom. The Central Commission for Discipline Inspection and National Supervisory Commission recently unveiled strict guidelines barring civil servants from quitting under five key scenarios. Failing to meet minimum service years. Holding sensitive posts without completing declassification periods. Facing audits or investigations. Leaving critical duties unfinished. Or falling under vague other legal stipulations. Critics like Du Wen, a former Inner Mongolia legal official, call the last clause a masterful catch-all. Artistic level, he quips, allowing authorities to block exits at will. Du Wen, writing on social media, paints a stark picture. It's not so easy to leave. He recalls his own year-long struggle to resign, stalled by endless new tasks. Just as today's work ends, tomorrow brings more, he says. It's impossible to push, delay, or escape. The rules, he argues, reflect Xi's iron grip, driven by a surging resignation wave amid salary cuts, grueling overtime, and dim promotion prospects. Once the coveted iron rice bowl, civil service now feels like a cage. Young officials like Bai Xue, a five-year township veteran, describe relentless schedules, 100-plus consecutive workdays, paltry pay, and creeping depression. She quit without approval. Li Chen, another escapee, fled after witnessing colleagues die from overwork and suicide, fearing he wouldn't survive to retirement. Now, he runs a self-media business from home. Even approved resignations offer no clean break. Former leaders face three-year bans on working in their old jurisdictions. Ordinary civil servants get two-year industry restrictions and must report career moves annually for scrutiny. You think you've joined stability, Du Wen says, but it's a pirate ship. The crackdown extends beyond resignation. Since 2023, The Financial Times reports, teachers, public employees, and journalists have been forced to surrender passports with local officials controlling travel. High-ranking or sensitive workers face the tightest leash. Du calls it a return to Mao-era isolationism, internal control, external defense. Naked officials fleeing abroad have long been targeted. Now, even minor access to internal data can brand someone classified. Salary woes fuel the exodus. New talk reveals widespread wage delays, benefit cuts, and funding shortages plaguing state units, even official media. In Henan, Puyang City TV staff protested unpaid salaries, waving banners, the party's mouthpiece cannot be abandoned, and demanding wages is a matter of survival. A Shaanxi state enterprise worker using the pseudonym Li Lei says only government-backed monopolies remain stable. Analyst Luo Denglian in Yahoo News offers a counterpoint. The rules restore power's public nature. Civil servants wield authority granted by the people, not personal privilege. Resignation isn't banned outright. Normal turnover continues, but boundaries between public duty and private gain are sharpened. Power is responsibility, not a springboard, Luo writes. Yet Du sees desperation. Xi's four confidences ring hollow against mass passport seizures and exit bans, measures even violating China's own entry-exit laws, which reserve document seizures for police investigations. No normal country does this, Du says. Europe doesn't cage its civil servants. The controls betray panic, a regime binding its own to prevent collapse signals' deep fragility. Kidnapping comrades to ensure stability is the ultimate red flag, Du warns. This pirate ship will sink. As overtime grinds spirits, salaries vanish, and freedom evaporates, China's civil servants are left with a chilling realization. The iron rice bowl has rusted into chains. For Xi's regime, loyalty isn't inspired. It's enforced. And history shows no ship, no matter how tightly crewed, sails forever when the hull is cracking. China's Anesthetic Fish Scandal Exposed, Sparking Widespread Online Outrage In China's bustling seafood markets, where freshness is a selling point, a disturbing truth is bubbling to the surface. Many of those wriggling live fish may have been chemically sedated before reaching your plate. A series of viral videos recently exposed a growing practice among Chinese fish vendors using anesthetic drugs to immobilize live fish before transport. In the footage, workers pour buckets of mysterious liquid into tanks teeming with fish. Within a minute, the water goes eerily still. Once the fish stop moving, they're easily packed for shipping. The purpose, sellers claim, is simple—fewer deaths and higher profits. The anesthetic, marketed online under names like Fish Calmer and Fisherman's Treasure, typically contains eugenol, a clove oil compound used in dentistry. Sellers boast that a single drop can sedate a tank of fish. The drug, they say, helps fish survive the stressful journey from farms to markets. Once they arrive and the water has changed, the fish wake up and appear freshly caught. But the public isn't buying it. Many Chinese social media users reacted with outrage, calling the practice yet another blow to the country's fragile trust in food safety. Everything we eat has drugs in it, except the medicine, one viral comment declared. Others link the issue to wider health fears, lamenting that too many chemicals are harming fertility and long-term well-being. Bloggers and aquaculture insiders have added fuel to the fire. Some say nearly all live fish sold in wet markets have been sedated, which explains the faint chemical taste some consumers describe. If too much anesthetic is used, the fish never revive, a loss that sellers try to prevent by rapidly changing water, adding oxygen, or flushing the gills. Experts have stepped in to calm public fears, arguing that eugenol-based sedatives are useful for transport, and that cooking through steaming, boiling, or stewing can eliminate residues. But many Chinese netizens remain skeptical. Let the experts eat anesthetized fish for 20 years, one wrote, then we'll believe it's safe. And the controversy doesn't end there. Investigations have revealed that some traders go further, adding industrial disinfectants such as malachite green, an illegal carcinogenic dye once used in aquaculture, to keep fish alive and looking healthy. Some restaurant suppliers reportedly use the same chemicals to maintain the appearance of fresh seafood for diners. For many, the revelations have reignited an old anxiety that profit-driven shortcuts are quietly eroding food safety in China. The image of a still, sleeping fish drifting in a pool of chemicals has become a potent symbol of that unease. As one online commentator bitterly summed up, in this country, even the fish need drugs just to stay alive. three Chinese astronauts, Wang Jie, Chen Zhongrui, and Chen Dong, were forced to remain in orbit for the time being after their return capsule was reportedly struck by a piece of suspected space debris just hours before their scheduled return to Earth. According to a statement released earlier that morning, around 10.30 a.m. local time, by the China Manned Space Agency, CMSA, the Shenzhou-20 manned spacecraft was suspected to have been hit by a small fragment of space debris and is currently undergoing impact analysis and risk assessment. After careful consideration, it has been decided that the Shenzhou-20 return mission, originally planned for November 5, will be postponed, the CMSA said in its statement. It remains unclear how severely the spacecraft was damaged or when the crew will be able to return to Earth. The Shenzhou-20 crew, consisting of Wang Jie, Chen Zhongrui, and Chen Dong, has been docked at China's Tiangong Space Station since April 24. They had been scheduled to return to Earth on Wednesday. This is not the first time the Chinese space station has been struck by space debris. As the number of spacecraft orbiting Earth continues to rise, the amount of orbital debris has increased sharply. According to Ars Technica, one of the station's solar panels was hit by debris in 2023, causing a partial power outage. As the United States presses ahead with its Artemis program, aiming to return astronauts to the moon by December 2025, China has set its own goal of landing astronauts on the moon by 2030. However, Wednesday's debris collision highlights the formidable challenges China may face in achieving its space ambitions. Beyond technical concerns, the growing number of Chinese spacecraft has also raised the specter of the Kessler syndrome, a scenario in which cascading collisions among orbital debris could eventually render low-Earth orbit unusable. The safety of space stations and shuttles in orbit remains a matter of international concern. Don't forget to like and subscribe for more in-depth coverage from Decoding China. Thank you for watching.