China might not make it on its planned path to become the major economic force and the dominant political force in the world. The West has become increasingly nervous over the past couple of decades as China has risen from a fairly backward, impoverished and militarily incompetent nation, into a significant world power in all of those categories.
I vividly remember talking to my son after he spent a month in Shanghai as part of his executive MBA program, which took him from New York University, the London School of Economics, the Paris Business School, Mumbai and Shanghai. The program in Shanghai involved seminars with many of the top Chinese agencies and personnel. He came away with the solid conviction that all of the senior people he, and his group, met were totally convinced that it was China’s right and destiny to rule the world. Further, they openly expressed that opinion as fact, at least in their eyes.
Today, the West has developed an almost subliminal paranoia that the Chinese leaders my son encountered are correct, although no-one wants to admit it publicly. A recent series of articles in The Economist suggests that this paranoia may be misplaced, although the potential danger of China’s military aggression may increase as their economic expectations are not met.
China’s economy is slowing; its population is aging; its population has peaked; and its military is growing rapidly. China might not make it and that is a dangerous possibility when viewed from a megalomaniacal perspective, and Xi Jinping certainly has that perspective. Let’s look at those points in more detail.
All indications are that China’s economy is slowing down. Its growth is getting perilously close to the minimum it needs to service its debt. This debt has resulted from the massive, almost reckless, expenditures on internal infrastructure projects over the last ten years. They have also spent massive amounts on overseas infrastructure projects in its attempt to buy influence, and economically subjugate, third-world countries. The recent catastrophe of the country’s biggest real estate company is symptomatic of this problem.
Formally, the projections showed that China’s economy would pass the economy of the US by 15% by 2035, before leveling out. Current revised projections show that the leveling out will occur before China reaches the US levels. This would have severe political consequences for Xi Jinping, and he is unlikely to react well, if that happens.
China’s population is aging, with the average age at over 50 and climbing. That means that future resources to support the elderly will inevitably increase even as the numbers of working-age population decreases: The decrease in the working population will be demographically exacerbated by the past decision to restrict the birthrate to one child per family, and the current failure of the attempted corrective policy of encouraging the population to have more children.
When you combine all these negative factors and apply them to the economic plans of Xi Jinping, you can see he will be faced with a serious dilemma. If his “economic takeover of the world” cannot be achieved, what is his alternative? The buildup of his armed forces could provide him with the most obvious answer.
China’s navy passed the US Navy, in size, in 2020. That statistic may not be as bad as it sounds when you factor-in actual capability, but the trend is certainly worrying. China still spends less on its armed forces than the US: 9% of annual budget over the past few years and currently at 7.2% – the US budget is about four-times bigger in real terms.
When you put all this together, the picture of China, as the future dominant country in the world, becomes, potentially, more dangerous but, perhaps, more containable. Horrific and untenable as the idea of war between the US and China is, and this is true for both sides, it is not as insidious as economic warfare. The danger, of course, is that someone will make a mistake, or a serious error of judgement, and the consequences of that could be catastrophic. China might not make it is a hope, and a warning.
I certainly do not claim that this short analysis is anywhere near comprehensive, but I do hope it hints at a new perspective of China role, possibly diminished, in the future of the world. China might not make it.
I would love to see any reactions you may have.
