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3 August 2022

A Shrinking China Can’t Overtake America

Howard W. French

In 2009, on the heels of a U.S.-driven international financial crisis, a book by a British journalist, Martin Jacques, exploded out of the gates of the publishing world and, for a time, dominated perceptions of what many saw then (and now) as perhaps the most important questions in global affairs: Whither China? And with its stirring rise, what will its impact be on the distribution of global power?

Surprisingly for a 550-page book, the title told you nearly everything you needed to know about its contents: When China Rules the World: The Rise of the Middle Kingdom and the End of the Western World. Jacques made a variety of claims under this rubric, but two stood out by far. By more or less mechanical extrapolation, he predicted that China would surpass the United States in GDP by the middle of the 2030s, on its way toward becoming a truly dominant economic weight in the world later this century.

Some of the ramifications of this, Jacques wrote, were that Mandarin would rival or replace English as a global language, Beijing would effectively become the political capital of the world, and the world’s other population giant, India, would be forced to accept China as the leading power in its neighborhood and off the shores of what India might otherwise consider its own natural sphere of influence.

Jacques’s projections already look hopelessly naive and out of date today. But at the time, the book hit a sweet spot both in terms of pessimism in the West about that long-dominant part of the world’s ability to sustain its global position and in terms of awe about China’s then-ongoing economic performance and its overall implications for others.

I am skeptical of—but nonetheless reserve judgment on—Jacques’s other big categorical claim: that China’s rise should be understood as a civilizational phenomenon and that the large country with the most impressive economic performance stretching at that point across several decades was succeeding in building a political system and style of governance that rendered Western ideas about such things as democracy, rule of law, and so-called free market economics obsolete.

In a vivid illustration of the fickleness not just of book publishing but also of public opinion, one of Jacques’s most important predecessors in the realm of idea-shaping works on China for the general public was published a mere eight years earlier, sold extremely well, and came to completely opposite conclusions. Like Jacques’s book, the title tells you nearly everything you need to know. Here, I refer to American lawyer Gordon Chang’s The Coming Collapse of China.

We needn’t dwell very long here on Chang’s argument because it has already been more than two decades since its release—a sure disqualification for his thesis, which said China only appeared to be prospering and stable. In reality, the country was barely coherent, its political system anachronistic and dysfunctional, and its economy utterly unprepared for the competition with foreign companies that he said was bound to arrive with China’s then-pending entry into the World Trade Organization. Chang, as confident in his predictions as Jacques was, even assigned a deadline for the demise of Communist Party rule in China, saying it would not survive beyond 2010.

The point of raising these two examples as literal bookends for popularizing attempts to assess China’s direction and the implications of its fortunes is not to criticize them, per se, but rather to propose a much more powerful—and, I believe, reliable—heuristic for gauging China’s prospects than the kind of straight-line GDP projections and ideological arguments used by these and many other authors. And although not foolproof, especially for distant projections, the basis I offer here is far less subject to annual or cyclical fluctuations, the vicissitudes of policy, or even occasional changes in national leadership: demographics.

As I first wrote in 2016 and then expanded on in my 2017 book, Everything Under the Heavens: How the Past Helps Shape China’s Push for Global Power, China’s population dynamics constitute one of the most powerful but regularly underappreciated factors shaping the world today—and they have only worsened since then.

Among other things, they help explain Chinese President Xi Jinping’s determination as he asserts China’s positions more forcefully than his recent predecessors. There is a personal factor involved here too, of course. But China’s leaders surely know that their country’s moment of maximum opportunity in the world is now—at the tail end of decades of fast economic growth—and that the resources for global diplomacy, influence-building, and military investment will soon come under tremendous pressure from the need to fund more prosaic but inescapably necessary things, such as much more robust social security, national health insurance, and retirement systems.

During the period of China’s sharpest ascent, the country benefited immensely from what experts call a “demographic dividend,” meaning a population structure strongly skewed toward young people of prime working age as opposed to older adults. Now, with astonishing speed, the balance of China’s population ratios is shifting in the opposite direction, and the dramatic effects of this are increasingly coupled with a secular decline in the country’s overall population. A newly released revision of the United Nations Population Division’s demographic projections estimates that by the end of this century, China will no longer be the most populous country in the world. Perhaps even more surprising, according to the U.N.’s newest projections, China will be almost exactly half the size of India, which is expected to have 1.53 billion people, by 2100. To those who object that 2100 is too far off to be of practical relevance, by 2050, India, with 1.67 billion people, will already have around 300 million more people than China.

For those skeptical of this kind of modeling, it is worth pointing out that many experts consider the U.N.’s median scenario, which this data has been drawn from, is (if anything) overly cautious and understates matters. This seems to be borne out by the U.N.’s own periodic revisions. The newly issued projection, for example, says China’s population has begun to decline this year, nine years earlier than it had predicted in 2019, and that India’s population will surpass that of China in 2023, seven years earlier than predicted in that three-year-old revision. Yi Fuxian, a longtime analyst of China’s population dynamics at the University of Wisconsin-Madison, believes that even this does not go far enough and cites what he says are leaked Chinese documents that show the country’s present population to be 1.28 billion people rather than the 1.41 billion people that is officially claimed.

Here, right away, one can say goodbye to one of Jacques’s biggest claims. China will almost certainly not have an economy that towers over that of the current incumbent, the United States. That is for the simple reason that GDP is a measurement of the average labor output in an economy multiplied by the total number of workers. Although this could certainly change, productivity growth per worker in China has been declining in recent years following strong gains earlier on in the country’s economic reform era. Having anything remotely in the order of half as many people as China has today will have profoundly negative consequences for the country’s overall economic size.

Mind you, I did not say or mean necessarily that it would have profoundly negative consequences for the country. China could do well with far fewer people in terms of stress on its environment and severe crowding in its cities. It just won’t have an economy that towers far above every other by the crude measurement of GDP so favored by Jacques and in most conventional analyses of global power distribution. And barring ecological disaster or catastrophic mismanagement, China will not be in a position to lord over India either.

What are the geopolitical implications for the West? China’s working age population is already decreasing moderately, and as already low fertility rates remain depressed and the median age of the population increases, it is predicted to begin a phase of sharp decline in the next decade. If one follows the U.N. projections all the way to the end of this century, the size of the U.S. population will be slightly more than half that of China’s, a dramatic relative increase compared to less than a quarter today. Given that current per capita income in the United States is nearly six times greater than in China in nominal terms—and 3.6 times higher in terms of purchasing power parity—even if the United States were to lose its lead in overall economic size sometime in the next few years, the contrasting population dynamics of the two countries make it likely that America would soon regain the lead.

This is a good place to make clear what this argument is and is not about. Firstly, it should not be taken as an encouragement for smug complacency. More than most countries, the United States has a large measure of control over one of the most important determinants of its future prosperity: whether its population will continue to grow or not as well as how fast. This is because compared to its chief competitors—whether China, the European Union, Russia, or even India—the United States has a strong tradition of immigration in that its doors are relatively open to immigrants and people from all over the world strongly desire to immigrate there.

This is an advantage that the United States has treated with a combination of blinkered policy, paralysis, and popular scorn in this century, with many politicians, particularly in the Republican Party, promoting the false ideas that the country is overrun with immigrants leading to overcrowding, rampant crime, and the collapse of public finances.

In the next decade or two, as the pace of aging increases in the global north, many countries will be forced to compete for immigrants. Success in the global economy will thus depend on the ability of their political classes to resist the demagogic temptations of xenophobia and racism as well as craft policies that can help sustain a positive and controlled flow of immigrants and ensure their successful integration into society.

China, unlike the United States, has almost no experience with such matters. To an extent that few people in the rich world yet realize, in the decades to come, Africa will be the dominant reservoir of ambitious working age people in the world. This will particularly test people in the global north, including China, whose traditional elite notions of identity are deeply bound up in race like nothing has before.

As I have written many times, now is the time for the rich and powerful countries of the world to end their relegation of Africa to the neglected stepchild’s dining table and engage with the continent in a way that can help strongly boost general prosperity there as a matter of justice and urgency. It would help if they realized that it will soon become a matter of self-interest for them too because prosperity in Africa will both moderate migration and elevate the level of education and training of the young people who leave the continent and whom the rich world will increasingly be unable to do without.

I also do not, as so many analysts do, take global preeminence as an absolute good in and of itself. What kind of power a country aspires to be is a more important question, in my view, than the more commonplace obsession over whether a country can sustain its rank, supplant others, or stay on top. Here, too, the United States is in bad need of a renewal. A good portion of what political scientists call its comprehensive power stems from its soft power. By this, I mean more than the influence of its entertainment industry or popular culture. Part of the American appeal to other countries, despite its many faults, has long been its perceived attachment to democracy, including (of course) its popular suffrage but also other things such as its freedom of speech, institutional checks and balances, rule of law, social and economic mobility, and work on behalf of shared prosperity and democracy for others.

To varying degrees, these attributes have been in crisis during this century in what is still the world’s most powerful country. If the United States cannot renew itself in terms of virtues like these, the appeal it has long exerted on others will increasingly dissipate, and at some point down the road, the time will come to ask the question: What’s the point of being number one?

The jury is out, meanwhile, on whether what Jacques sees as a distinctive civilizational approach to governance in China will withstand the test of time—that is, whether Beijing’s brand of authoritarianism will enable the country to meet the enormous challenges that loom with the coming end of its high-growth era and the rapid shrinking and aging of its population. For the time being though, for the United States, deepening its democratic credentials seems like a wise bet.

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