China boosters and alarmists alike see China as the rising power of the twenty-first century, a country that will inexorably expand to challenge the United States and overturn the existing world order. With nearly 1.4 billion people and a rapidly growing economy, it seems like nothing could possibly stand between China and eventual global supremacy. China’s economy will overtake America’s in 2018, 2028, or 2032 (take your pick), with political and military preeminence sure to follow.
Cue Chinese aircraft carriers roaming the Gulf of Mexico, the SAT being offered only in Chinese, and China’s Alibaba displacing Amazon as America’s new internet giant. Look at the world through Chinese eyes, and you can just about imagine how it might feel. Today, American aircraft carriers do roam the South China Sea, Chinese children do have to take the SAT in English, and if Amazon doesn’t dominate China’s retail market, other American brands are everywhere in China.
But none of that will be changing anytime soon. In fact, as China continues to develop and mature, China’s immersion in (and support for) the US-dominated world order will only increase. The reasons for this are structural and almost immutable. Demography, economics, and geography are combining to limit China’s global power and tie China ever more closely to the United States.
It’s the demography, stupid
Accounts of China’s rise and rise rest on one simple assumption: take a population of 1.4 billion and multiply it by any GDP growth at all and you rack up some impressive figures. But China won’t have 1.4 billion people forever. In fact, China’s population will barely touch 1.4 billion in the 2020s before falling into steep decline.
China’s working age population will fall 5% by 2030, a decline that is inevitable because the workers of 2030 have all been born already. It is likely to fall by a further 20% by mid-century as China “gets old before it gets rich.” By the end of the century China’s population might fall to as low as 600 million, and will certainly be less than 1 billion. Demographic decline will soon become a serious drag on economic growth.
By contrast, the United States and its Anglo-Saxon allies (Australia, Canada, New Zealand, and the United Kingdom) are growing steadily, mainly because of immigration. Donald Trump’s anti-immigration rhetoric has done nothing to staunch the flow of educated, entrepreneurial people from China and other countries. Demographically speaking, the European Union and Japan may fade away, but America and the Anglosphere are here to stay.
The Calichina economy
China says that its economy is growing at 6.7%, right on target — as usual. All of China’s economic statistics have been mysteriously right on target ever since China fired finance ministry veteran Wang Baoan as the head of the National Bureau of Statistics and replaced him with Ning Jizhe, the vice chairman of the economic planning commission. Ning is now conveniently in charge of both setting China’s GDP targets and measuring its performance.
To the extent that China’s economy really is hitting Ning’s targets, it is entirely due to credit expansion: i.e., rising debt. That bubble may never burst, since most of China’s bad loans are debts owed by state-owned enterprises to state-owned banks. Still, although China can prevent a bust, it can’t expand credit forever. And as the moribund state sector soaks up more and more of the country’s resources, it becomes an ever heavier drag on the rest of the economy.
The part of China’s economy that really is booming is the high-tech, foreign-investment-driven private sector economy. Here the growth comes from trans-Pacific integration, not government policies. Corporate America’s fanciest gadgets may be made in China, but high-tech China’s economic growth is overwhelmingly made in America. In the event of any real trouble between the U.S. and China, these crucial American investments would move elsewhere. Apple won’t be making iPhones in a country at war with the United States.
The curse of the Middle Kingdom
The very word for China in Chinese, Zhongguo, means “Central State” (or “Middle Kingdom”), and China truly is the central state of East Asia. Back when East Asia was China’s whole world, or tianxia, that central position was an advantage: surrounded by many smaller, weaker countries, China could consistently call the shots. But globalization has brought China into a much bigger world, one it can never hope to control.
If East Asia were the whole world, today’s China could easily bully peripheral countries like Japan and South Korea into doing its bidding. But the American power standing behind these countries puts China in a much tougher neighborhood. Having Russia for a neighbor doesn’t help either. China is surrounded by powerful neighbors that have even more powerful allies.
China has three nuclear-armed neighbors, with American nuclear submarines always lurking off its coasts. China also has to deal with unstable neighbors like Afghanistan, Tajikistan, and Myanmar, not to mention the crazy regime in North Korea. China may have the world’s largest army, but its neighbors have the world’s second, fourth, fifth, sixth, seventh, and ninth largest armies — and the U.S. is third. Centrality never looked so bad.
In 2018, we are rapidly approaching “China Max,” if we haven’t reached it already. In the 2020s and beyond, China will be shrinking in population, dependent on the U.S. for economic growth, and ringed in by wary if not hostile neighbors. It will be in no shape to challenge the United States, never mind take over the world.
Chinese military planners are well-aware of this, and mostly limit their ambitions to regaining dominance of their own coastal waters. This they may achieve. But that would hardly pose a threat to the security of the United States — or the world. China needs peace as much as the rest of us, and probably more. In 2018, let’s hope they get it, and the rest of us too.