Managing a Faltering China

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Managing a Faltering China

In Washington and other capitals around the world “the defining geopolitical story of our time is the slow death of U. S. hegemony in favor of a rising China.  Harbingers of Beijing’s ascent are everywhere.  China’s overseas investments span the globe.  The Chinese navy patrols major sea lanes, while the country colonizes the South China Sea in slow-motion.  The government cracks down on dissent at home, while administering a hefty dose of nationalist propaganda around the world.”

Yet, like so much of today’s conventional wisdom, this story does not stand up under scrutiny.

Beijing’s newfound assertiveness looks, at first glance, as the mark of growing power and ambition.  But in fact, it is nothing of the sort.  China’s actions reflect profound unease among the country’s leaders, as they contend with their country’s first sustained economic slowdown in a generation and they can discern no end in sight. China’s economic conditions have steadily worsened since the 2008 financial crisis.  The country’s growth rate has fallen by half and is likely to plunge further in the years ahead, as debt, foreign protectionism, resource depletion, and rapid population aging take their toll.

But while China’s economic woes will make it a less competitive rival in the long term, they make it a greater threat to the United States, today.  Why?  As Michael Beckley recently explained in Foreign Affairs, “When rising powers have suffered such slowdowns in the past, they became more repressive at home and more aggressive abroad.  China seems to be headed down just such a path.”

In March 2007, at the height of a years-long economic boom, then-Premier Wen Jiabao gave an uncharacteristically gloomy press conference.  China’s growth model, Wen warned, had become “unsteady, unbalanced, uncoordinated, and unsustainable.”  The warning was prescient: in the years since, China’s official gross domestic product growth rate has dropped from 15 percent to six percent—the slowest rate in 30 years.  And China’s economy is now experiencing its longest deceleration of the post-Mao era.

If real, a growth rate of six percent could still be considered spectacular; the U.S. economy was stuck at a rate of around two percent from 2008 to 2016.  But many economists believe that China’s true rate is less than half the official figure...

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