From 2021:
The End of China’s Rise | Foreign Affairs
aka "Beijing Is Running Out of Time to Remake the World"
"China’s multidecade ascent was aided by strong tailwinds that have now
become headwinds. China’s government is concealing a serious economic
slowdown and sliding back into brittle totalitarianism. The country is
suffering severe resource scarcity and faces the worst peacetime
demographic collapse in history. Not least, China is losing access to
the welcoming world that enabled its advance.
Welcome to the age of “peak China.” Beijing is a strong revisionist
power that wants to remake the world, but its time to do so is already
running out. This realization should not inspire complacency in
Washington—just the opposite. Once-rising powers frequently become
aggressive when their fortunes fade and their enemies multiply. China is
tracing an arc that often ends in tragedy: a dizzying rise followed by
the specter of a hard fall.
China has been rising for so long that
many observers
think its ascendance is inevitable. In fact, the past few decades of
peace and prosperity are a historical anomaly, caused by several
fleeting trends.
To
start, China enjoyed a mostly safe geopolitical environment and
friendly relations with the United States. For most of its modern
history, China’s vulnerable location at the hinge of Eurasia and the
Pacific had condemned it to conflict and hardship...
World trade surged sixfold from 1970 to 2007. China rode the momentum of globalization and became the workshop of the world.
It could do so because China’s government was largely committed to reform...
China also had the right kind of population. It experienced the greatest
demographic dividend in modern history. In the first decade of this
century, it boasted ten working-age adults for every senior citizen. The
average is closer to five for most major economies.
That demographic advantage was the fortuitous result of wild policy
fluctuations. In the 1950s and 1960s, the CCP encouraged women to have
many children to boost a population decimated by warfare and famine. The
population surged 80 percent in 30 years. But in the late 1970s,
Beijing pumped the brakes, limiting each family to one child. As a
result, in the 1990s and in the early years of this century, China had a
massive workforce with relatively few seniors or children to care for.
No population has ever been better poised for productivity.
China did not need much outside help to supply its citizens with food
and water and its industries with most raw materials. Easy access to
these resources, plus cheap labor and weak environmental protections,
made it an industrial powerhouse.
But
once-in-an-epoch bonanzas don’t last forever. For the past decade,
advantages that once helped the country soar have become liabilities
dragging it down.
For
starters, China is running out of resources. Half of its rivers have
disappeared, and pollution has left 60 percent of its groundwater—by the
government’s own admission—“unfit for human contact.” Breakneck
development has made it the world’s largest net energy importer. Food
security is deteriorating: China has destroyed 40 percent of its
farmland through overuse and become the world’s largest importer of
agricultural products. Partly owing to resource scarcity, growth is
becoming very expensive: China must invest three times as much capital
to generate growth as it did in the early years of this century, an
increase far greater than one might expect as any economy matures.
China is also running out of people, thanks to the legacy of the one-child policy...
Dealing
with these problems will be especially difficult because China is now
ruled by a dictator who consistently sacrifices economic efficiency for
political power. Private firms generate most of the country’s wealth,
yet under President Xi Jinping, private firms are starved of capital.
Instead, inefficient state-owned enterprises receive 80 percent of
government loans and subsidies. China’s boom was spearheaded by local
entrepreneurs, but Xi’s anticorruption campaign has scared local leaders
from engaging in economic experimentation. His government has
essentially outlawed negative economic news, making smart reforms nearly
impossible, while a wave of politically driven regulations has
squelched innovation.
As
China has become more assertive and authoritarian, the world has become
less conducive to Chinese growth. Beijing has faced thousands of new
trade barriers since the 2008 financial crisis. Most of the world’s
largest economies are walling off their telecommunications networks from
Chinese influence. Australia, India, Japan, and other countries are
looking to cut China out of their supply chains.
With
the end of its four-decade holiday from history, China now faces two
trends—slowing growth and strategic encirclement—that spell the end of
its rise.
Owing
to its accumulating problems, the Chinese economy has entered the most
protracted slowdown of the post-Mao era. China’s official GDP growth
rate dropped from 15 percent in 2007 to six percent in 2019, before
COVID-19 dragged growth down to a little over two percent in 2020. Even
those figures are overstated:
rigorous studies show that China’s actual growth rate could be as low as half the government-listed figure.
Worse
still, most of China’s GDP growth since 2008 has resulted from the
government’s force-feeding capital through the economy. Subtract
stimulus spending and China’s economy is hardly growing at all.
Productivity, the key ingredient for wealth creation, declined ten
percent between 2010 and 2019—the worst drop-off in a great power since
the Soviet Union in the 1980s.
The indications of this unproductive growth are ubiquitous. China has more than 50 ghost cities—urban centers with highways and
houses but not people. Almost two-thirds of China’s infrastructure
projects will never recoup the costs of their construction. The result,
unsurprisingly, is out-of-control debt. China’s total debt jumped
eightfold between 2008 and 2019. We know how this story ends: with
investment-led bubbles that collapse into prolonged slumps. In Japan,
excessive lending resulted in three lost decades of negligible growth.
In the United States, it caused the Great Recession. Given the size of
China’s debt mountain, its downturn could be even worse. The problems
that the massively indebted Chinese property developer Evergrande is now
experiencing may simply be signs of things to come...
China’s
top-down R & D system, although excellent at mobilizing resources,
stifles the open flow of information and capital necessary for sustained
innovation. The ongoing political clampdown, by incentivizing
intellectual conformity, will compound the problem.
Beijing
has, for example, spent tens of billions of dollars on a domestic
microchip industry yet still relies on imports for 80 percent of the
country’s computing needs. China threw tens of billions of dollars into
biotech, yet its
COVID-19 vaccines can’t compete with those produced in democratic countries ...
As Beijing has become more aggressive in the South China Sea, the Taiwan
Strait, and elsewhere, it has engendered hostility nearly all around...
In
Northeast Asia, Taiwan has become more determined than ever to maintain
its de facto independence, and the government has approved a bold new
defense strategy that could make the island extremely hard to conquer.
Japan has agreed to cooperate closely with the United States to fend off
Chinese aggression in the region. Through its own belligerence, Beijing
has given the U.S.-Japanese alliance an explicitly anti-China cast.
The
countries around the South China Sea are also starting to hedge against
China. Vietnam is acquiring mobile shore-based missiles, Russian attack
submarines, new fighter aircraft, and surface ships armed with advanced
cruise missiles. Singapore has quietly become a significant U.S.
military partner. Indonesia increased its defense spending 20 percent in
2020 and another 21 percent in 2021. Even the Philippines, which
courted China for most of President Rodrigo Duterte’s term, is now
reiterating its claims in the South China Sea and ramping up air and
naval patrols.
China’s
ambitions are provoking a response beyond East Asia, too, from
Australia to India to Europe. Everywhere Beijing is pushing, a growing
cast of rivals is pushing back. The Quadrilateral Security Dialogue—a
strategic partnership that includes Australia, India, Japan, and the
United States—has emerged as a focal point of anti-China cooperation
among the most powerful democracies in the Indo-Pacific. The new AUKUS
(Australia–United Kingdom–United States) alliance unites the core of the
Anglosphere against Beijing. The United States is forging overlapping
mini-coalitions to ensure that advanced democracies stay ahead in key
technologies, while the G-7 and NATO are staking out tougher positions
on Taiwan and other issues. To be sure, counter-China cooperation
remains a work in progress, because many countries still rely on trade
with Beijing. But these interlocking partnerships could eventually form a
noose around Beijing’s neck...
As China’s problems take hold, the future will look menacing for
Beijing. The specter of stagnation will haunt CCP officials. Xi Jinping
will wonder whether he can deliver on his grandiose pledges. And that’s
when the world should get really worried.
Revisionist powers tend to become most dangerous when the gap between
their ambitions and their capabilities starts to look unmanageable. When
a dissatisfied power’s strategic window begins to close, even a
low-probability lunge for victory may seem better than a humiliating
descent. When authoritarian leaders worry that geopolitical decline will
destroy their political legitimacy, desperation often follows. For
example, Germany waged World War I to prevent its hegemonic aspirations
from being crushed by a British-Russian-French entente; Japan started
World War II in Asia to prevent the United States from choking off its
empire.
China today checks many worrying boxes. Slowing growth? Check.
Strategically encircled? Check. Brutal authoritarian regime with few
sources of organic legitimacy? Check. Historical axe to grind and
revanchist ambitions? Check and check. In fact, China is already
engaging in the practices—the relentless military buildup, the search
for spheres of influence in Asia and beyond, the effort to control
critical technologies and resources—to be expected from a country in its
position. If there is a formula for aggression by a peaking power,
China exhibits the key elements."
