The Chinese economy is struggling. The global dominance-seeking juggernaut is slowing down, and not just in the short term.
This year, the Chinese economy is expected to grow by only about 3%, shamefully well short of the government’s goal of 5.5%.
That would be the second-worst result in more than 40 years after decades of rapid expansion. The only year with a worse recession was 2020 due to COVID.
The percentage of unemployed young workers has increased to 20%. Fuel costs are increasing as a result of Russia’s conflict in Ukraine. The overcrowded housing market is in peril. And President Xi Jinping’s harsh “COVID Zero” lockdowns have caused chaos, most recently in Chengdu, a city with a high concentration of technology (population 21 million).
Do you recall when Americans were worried that China might surpass them to become the world’s greatest economy? It has been delayed to 2033 or later, and some economists believe it might never occur.
Because of the declining global economy and Xi’s opposition to importing foreign COVID vaccinations, some of those issues might be short-lived.
However, China also has persistent long-term issues, starting with a rapidly ageing population.
By the end of the century, China’s population is expected to drop by almost 40%, from 1.4 billion to about 800 million or so. Although some demographers predict a steeper decline, India will soon overtake the United States as the top nation.
Those depressing predictions are shared by China observers. However, they disagree on what that means for the future of the nation and for American strategy. When the underpinnings of its strength seem to be crumbling, how does a developing superpower respond?
Chinese leaders will be more ready to take risks in the short term, such as invading Taiwan, since they are aware that their authority is set to decline, according to the scary thesis put forth by two foreign policy professors, Hal Brands of Johns Hopkins and Michael Beckley of Tufts.
In a new book titled “Danger Zone: The Coming Conflict With China,” the authors state that China “is losing faith that time is on its side.”
According to Princeton University’s Aaron L. Friedberg, author of “Getting China Wrong,” nations “may muddle by with a considerable lot of poor economic performance and yet remain a substantial influence in international politics.”
He added that Xi and other Chinese leaders had a plan for overcoming their economic difficulties. He told me that they believe that technological advancements are the answer to all of their issues. They intend to do this in order to increase productivity and sustain a respectable rate of economic growth.
The export of American and other Western technology to Beijing needs to be subject to more stringent regulations, he said, adding that this is the first step in “slowing down” China’s technical advancement.
A more optimistic prospect, according to Friedberg and others, is that a slowing economy would persuade Chinese officials to spend less on bolstering their military and more on improving the lives of the Chinese people.
According to Bonnie S. Glaser of the German Marshall Fund, “We should not assume that an aggressive China would be.” “China might retreat within. Perhaps domestic stability is China’s first priority rather than Taiwan’s reunification.
The twenty-first century so might not be Chinese after all. China’s ascent to global dominance is neither predetermined nor inevitable.
So perhaps the twenty-first century is not entirely Chinese. China’s ascent to global dominance is neither predetermined nor inevitable.
But even an aged China with a slow-growing economy will be a powerful economic, technological and military opponent. Its leaders will remain ambitious, adamant on integrating Taiwan, and determined to usurp the United States as the preeminent power in Asia, at least until the end of Xi’s third term in 2027.
The difficulty facing China is evolving, but it still exists.
Lower overall economic growth is the result of the workforce’s slower rate of expansion. Achieving the same top-line growth as the population ages would demand significantly greater productivity growth rates because economic expansion is arithmetically the sum of workforce growth and labour productivity growth. Although further productivity growth would be appreciated, no one is really sure how to encourage it.
Therefore, it is worthwhile to return to the demographic aspect, with China as the primary focus because of its more severe population ageing. The main cause of China’s rapidly ageing population is the country’s low birthrate for females. Without immigration, the total fertility rate (i.e., the average number of children per female during her reproductive years) must be slightly higher than two in order to prevent population reduction.
China had a nearly six-to-one fertility rate in 1960. It’s currently about 1.5. The notorious one-child policy, which restricted couples to having one child each and was put into effect in 1979, is one of the frequently mentioned causes of the sharp decline. However, even prior to the implementation of the policy, China’s fertility rate had been sharply declining, in part due to earlier “longer, later, fewer” policies that discouraged the formation of large families by encouraging people to marry later, delay having children longer, and have fewer children overall. Research has found that, although it was significantly influenced by other formal and informal government actions, the one-child policy was not formally responsible for three-quarters of the fall in fertility rates since 1970.
After years of restricting births, the Chinese have begun to promote larger families. In 2013, the country began allowing some families to exceed the one-to-two family limit, and at the start of 2016, it expanded that trial programme to cover all families. Although the consequences on economic growth would take longer to materialise because it would take the newborn children roughly 20 years to start working, the change was predicted to result in larger households.
However, as several predicted at the time, the issue is not that the demographic gain will come later; rather, it is that it will not come at all. The Schwarzman Scholars Program’s director of academic programmes, Joan Kaufman, observed in 2016: “Thirty years of frequent warnings about China’s population crisis and birth limits generated a new norm. The majority of urban kids are still children, which seems reasonable.
Most people do not want to have additional children, therefore the policy change is best characterised as coming too late.
Kaufman was correct, and despite a brief increase the fertility rate in China is now at the same level as it was prior to the implementation of the stricter limitations. There are various causes for this, including the social expectation she mentioned as well as other issues including the cost of higher education, healthcare, and more housing for larger families. More generous maternity leave policies are deterring some businesses from hiring young women, which is one of the unpleasant unintended consequences of encouraging more children.