05 Oct 2021

China, Headed For Decline

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In Foreign Affairs, Michael Beckley and Hal Brands explain why the Chinese Miracle is soon going to be over.

China’s multidecade ascent was aided by strong tailwinds that have now become headwinds. China’s government is concealing a serious economic slowdown and sliding back into brittle totalitarianism. The country is suffering severe resource scarcity and faces the worst peacetime demographic collapse in history. Not least, China is losing access to the welcoming world that enabled its advance.

Welcome to the age of “peak China.” Beijing is a strong revisionist power that wants to remake the world, but its time to do so is already running out. This realization should not inspire complacency in Washington—just the opposite. Once-rising powers frequently become aggressive when their fortunes fade and their enemies multiply. China is tracing an arc that often ends in tragedy: a dizzying rise followed by the specter of a hard fall.

China has been rising for so long that many observers think its ascendance is inevitable. In fact, the past few decades of peace and prosperity are a historical anomaly, caused by several fleeting trends.

To start, China enjoyed a mostly safe geopolitical environment and friendly relations with the United States. For most of its modern history, China’s vulnerable location at the hinge of Eurasia and the Pacific had condemned it to conflict and hardship. From the First Opium War in 1839 until the end of the Chinese Civil War in 1949, imperialist powers ripped apart the country. After China unified under communist rule in 1949, it faced extreme U.S. hostility; Beijing suffered the enmity of both superpowers after the Sino-Soviet alliance collapsed in the 1960s. Isolated and surrounded, China was racked by poverty and strife.

The opening to the United States in 1971 broke this pattern. Beijing suddenly had a superpower ally. Washington warned Moscow not to attack China and fast-tracked Beijing’s integration with the wider world. By the mid-1970s, China had a safe homeland and access to foreign markets and capital—and the timing was perfect. World trade surged sixfold from 1970 to 2007. China rode the momentum of globalization and became the workshop of the world.

It could do so because China’s government was largely committed to reform. After Mao Zedong’s death in 1976, the Chinese Communist Party (CCP) instituted term limits and other checks on its top leaders. It began to reward technocratic competence and good economic performance. Rural communities were allowed to set up loosely regulated enterprises. Special economic zones expanded across the country and allowed foreign businesses to operate freely. In preparation for joining the World Trade Organization in 2001, Beijing adopted modern legal and tax collection systems. China had the right package of policies to thrive in an open world.

China also had the right kind of population. It experienced the greatest demographic dividend in modern history. In the first decade of this century, it boasted ten working-age adults for every senior citizen. The average is closer to five for most major economies.

That demographic advantage was the fortuitous result of wild policy fluctuations. In the 1950s and 1960s, the CCP encouraged women to have many children to boost a population decimated by warfare and famine. The population surged 80 percent in 30 years. But in the late 1970s, Beijing pumped the brakes, limiting each family to one child. As a result, in the 1990s and in the early years of this century, China had a massive workforce with relatively few seniors or children to care for. No population has ever been better poised for productivity.

China did not need much outside help to supply its citizens with food and water and its industries with most raw materials. Easy access to these resources, plus cheap labor and weak environmental protections, made it an industrial powerhouse.

But once-in-an-epoch bonanzas don’t last forever. For the past decade, advantages that once helped the country soar have become liabilities dragging it down.
For starters, China is running out of resources. Half of its rivers have disappeared, and pollution has left 60 percent of its groundwater—by the government’s own admission—“unfit for human contact.” Breakneck development has made it the world’s largest net energy importer. Food security is deteriorating: China has destroyed 40 percent of its farmland through overuse and become the world’s largest importer of agricultural products. Partly owing to resource scarcity, growth is becoming very expensive: China must invest three times as much capital to generate growth as it did in the early years of this century, an increase far greater than one might expect as any economy matures.

China is also running out of people, thanks to the legacy of the one-child policy. Between 2020 and 2035, China will lose roughly 70 million working-age adults and gain 130 million senior citizens. That’s a France-sized population of consumers, taxpayers, and workers gone—and a Japan-sized population of pensioners added—in 15 years. From 2035 to 2050, China will lose an additional 105 million workers and gain another 64 million seniors. The economic consequences will be dire. Current projections suggest that age-related spending must triple by 2050, from ten percent to 30 percent of GDP. For perspective, all of China’s government spending currently totals about 30 percent of GDP.

Dealing with these problems will be especially difficult because China is now ruled by a dictator who consistently sacrifices economic efficiency for political power. Private firms generate most of the country’s wealth, yet under President Xi Jinping, private firms are starved of capital. Instead, inefficient state-owned enterprises receive 80 percent of government loans and subsidies. China’s boom was spearheaded by local entrepreneurs, but Xi’s anticorruption campaign has scared local leaders from engaging in economic experimentation. His government has essentially outlawed negative economic news, making smart reforms nearly impossible, while a wave of politically driven regulations has squelched innovation.

As China has become more assertive and authoritarian, the world has become less conducive to Chinese growth. Beijing has faced thousands of new trade barriers since the 2008 financial crisis. Most of the world’s largest economies are walling off their telecommunications networks from Chinese influence. Australia, India, Japan, and other countries are looking to cut China out of their supply chains.

With the end of its four-decade holiday from history, China now faces two trends—slowing growth and strategic encirclement—that spell the end of its rise.


5 Feedbacks on "China, Headed For Decline"


It seems intuitive that central planning is a more efficient means of producing things than the chaos of free market individuals, but central planning can only produce the things the central planners demand and not the things that individuals with individual interests demand and therefore under-performs the free market every time it is tried. China can murder millions of people in an attempt to stamp out individuality, yet ultimately people will still want what they want.


This will make them very dangerous.

bob sykes


* has 30% of the world’s industrial capacity, all of it highly automated and modern; we are substantially deindustrialized;

* makes 35% of the world’s commercial shipping; we make none;

* has an economy at least one-third larger than ours and growing three times as fast

* has ten times as many engineers and scientists as we do; publishes more refereed science and technology papers; gets more patents than we do;

* has a stable government, while we are in near civil war territory, have declining industrial base (what little is left), have a collapsed education system, and a corrupt, incompetent, and disloyal military.

Just who is collapsing?

bob sykes

PS. If any country is about to start a major war it is the US. We have started nearly every war since the fall of the USSR. The US is the aggressive, militarist and terrorist power on the planet today.


China also has the “play” of the U.S. as the “outside enemy” on whom the failures can be blamed. Whatever, it will be our fault. Food supplies, international trade, etc. all on us. Good excuse for some military “distraction”.


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