China: Inexorable Rise or Inevitable Decline?

Oct 2

Written by Robert Bray; Edited by Andrew Ma

Published on October 2nd, 2022

Since the early 90s the world has come to know China as a growing economic, political, and military powerhouse set to dominate the world economy, influence global politics, and consolidate military preeminence in Asia(1). With the added pressures of the 2008 financial crisis, COVID-19, and the chaotic end of the presidency of Donald Trump, the United States and its allies have begun to believe President Xi Jinping (习近平) when he asserts that, “the East is rising and the West is declining.”(2)(3) However, other experts have asserted that China’s wobbly real estate market(4), worsening global image(5), Xi Jinping’s consolidation of power(6), and looming demographic decline(7) spell doom for Chinese ambitions. But China’s rise is neither inexorable nor its decline inevitable, its distinct advantages will likely keep it a global player while its mounting challenges will likely taper off its continued rise.

Economic strength is the backbone of power and those touting China’s rise note that China has it in spades. The country’s 9.5% average yearly GDP growth from 1979 to 2018 has been described by the World Bank as, “the fastest sustained expansion by a major economy in history.”(8)This expansion occurred under a state capitalist system that funds and protects “national champions” at the expense of foreign enterprises(9). China’s economic heft has facilitated its rapid military expansion and modernization, (10) its sharp elbowed pursuit of territorial claims (11), and an over trillion-dollar global infrastructure project that has curried influence in the Global South and beyond (12).

Meanwhile America’s unipolar moment, born amidst the collapse of the Soviet Union, has all but ended due to (often self-inflicted) domestic and international challenges(13)(14). Anxieties over China’s rise and the United States’ decline have prompted many foreign policy experts to either bemoan engagement and seek containment,(15)(16)or advocate unilateral retrenchment and the cooling of tensions(17)(18). However, China is facing multiple looming crises that have led others to believe that China is teed up for a sudden and violent fall rather than a glorious ascendancy.

The most immediate crisis is the dramatic double digit plunge of China’s real estate market, sparked by the 2021 default of Chinese real estate giant Evergrande(19). People all over China seeking to achieve a cultural benchmark for success have piled on debt to obtain increasingly pricy properties, resulting in the debt fueled bubbling of the country’s real estate sector(20). The end result is a 4 trillion dollar industry which makes up approximately 29% of the country’s GDP(21) that is now too big to fail. Adding to China’s economic woes is the inevitable demographic decline that will necessitate more expenses over the coming years toward social security that the government can ill afford with a diminishing work pool(22).

But proponents of China’s decline also point to President Xi Jinping himself as the aggravating factor that threatens China’s domestic stability and international power. Xi Jinping’s strengthening grip over the economy and suppression of the private sector constrains future economic growth, while an increasing insistence on ideological orthodoxy and personal loyalty

reduces decision making flexibility and government competency(23). Xi Jinping’s foreign policy is also notably more aggressive than his predecessors. Territorial disputes in the Galwan Valley, East China Sea, and South China Sea have antagonized neighbors who may otherwise be more amenable to China, rallying them to the United States’ camp.(24)(25) All of these issues combined perhaps not only threaten China’s rise, but its long term stability.

Ultimately, triumphalism about China’s rise and doom scrying its fall are both currently unsubstantiated. China’s economy and thus its rise will slow down as its population ages and the contradictions of its state capitalist system worsen, but it will likely nonetheless cement itself as the world’s second largest economy through the shear mass of its population and its growing technological capacity(26). China will continue to have the funds necessary to enhance its military and jostle with regional rivals(27). Much like the Cold War of the 20th century, the end result of the 21st century’s great power competition won’t likely be determined by demographics or housing markets, but the ability of government institutions to deliver results for its citizenry. We will learn how China fares in the coming years when its institutions are increasingly put to the test.

(1) https://www.foreignaffairs.com/articles/asia/1993-12-01/rise-china

(2) https://www.scmp.com/news/china/diplomacy/article/3124752/chinas-officials-play-

rise-east-decline-west?module=inline&pgtype=article

(3) https://www.pewresearch.org/fact-tank/2019/03/21/looking-ahead-to-2050-

americans-are-pessimistic-about-many-aspects-of-life-in-u-s/

(4) https://www.nytimes.com/article/evergrande-debt-crisis.html

(5) https://thediplomat.com/2022/07/chinas-poor-global-image-is-undermining-its-

strategic-goals/

(6) https://www.foreignaffairs.com/articles/china/2021-06-22/xis-gamble

(7) https://foreignpolicy.com/2022/07/29/china-population-decline-demographics-

ecomomic-growth/

(8) https://crsreports.congress.gov/product/pdf/RL/RL33534