For years, American politicians have warned that China could challenge the US as the world’s leading superpower. As China’s growth rate regularly outstrips its Western rivals, it appears to be on track to become the world’s largest economy.
But even the most positive assessments of China’s rise always predict that its growth will eventually slow. That slowdown came earlier than expected, due to bad decisions by the Chinese leadership.
Two developments yesterday highlighted the risks for China. Chinese officials announce the country’s population declined last year for the first time in more than 60 years. They also released data showing the economy grew by just 3% last year, far below the government’s 5.5% target.
Both of these outcomes are closely linked to Chinese policy. The government’s decades-long efforts to reduce the country’s birth rate, including a policy allowing most families to have only one child, has accelerated the rate of population decline. And the recession is partly tied to the no-Covid policy that China withdrew just last month, leaving the country unprepared to reopen.
This newsletter will explain what yesterday’s developments mean for China’s future.
growth retard
Experts have long predicted China’s population decline. Some analysts think the real decline has begun last year. Regardless, the drop is coming faster than expected; Previous projections from China and the United Nations suggest the decline won’t begin until the next decade.
The population is aging rapidly. The average age in China has surpassed that of the United States and could rise above 50 by 2050. Even the countries with the fastest aging rate in Europe unexpected past the average age of 50 until about 2100.
To some extent, China is following a typical trajectory: The birth rate tends to decrease and the median age tends to increase as countries develop. Birth rates have also declined generally across East Asia. But China accelerated its trajectory with its one-child policy, which began in the late 1970s and was in effect until 2016; Its birth rate is currently lower than in the US, Europe and Japan.
China “will no longer be a country with a young, dynamic and growing population,” said Wang Feng, an expert on China’s demographic trends at the University of California, Irvine. told my colleagues Alexandra Stevenson and Zixu Wang. “We’re going to start to appreciate China, in terms of population, as an aging country and a shrinking population.”
Population decline is bad for China’s economic growth. An aging population makes the workforce weaker, and it tends to use more government resources through retirement and healthcare benefits, like Paul Krugman explained in Times Comments.
The demographic news comes at a time when economic growth has slowed in China. Even before yesterday’s announcement, China’s growth had mostly slowed for more than a decade.
The government’s Covid-free policy has made matters worse by forcing large parts of the country, including economic drivers like Shanghai, to close abruptly and repeatedly. Now that the policy has been lifted, the virus has spread rapidly — again damaging the Chinese economy as sick workers stay home.
In both cases, the decisions of the Chinese leadership play a central role, stifling China’s potential. This is obviously possible in any country, but it is a particularly big risk for China because of its authoritarian form of government that centralizes power with little public accountability. them more. In the era of Xi Jinping, power has become even more concentrated.
“As the China of the 1980s and 1990s saw real debates over many state policies, today’s party leaders find themselves forced to repeat Xi Jinping’s policy lines. Peace or silence to protect yourself,” said Carl Minzner, senior fellow for China studies at National University. Council on Foreign Relations.
Uncertain future
Neither of these developments mean that China’s rise is certain to end. “Modern China, as a phenomenon, is unprecedented, making it very difficult to predict,” says Max Fisher, my colleague in charge of international affairs. know. “Whoever gives you a big, confident, flashy prediction is making you spin.”
China is large enough that it will almost certainly continue to play an important role on the world stage, and its economy could still surpass that of the United States. The question is whether China will become a true superpower, as rich and influential as the United States.
Consider: China’s GDP per capita — a measure of economic value per person — is less than one-fifth of the United States’ GDP. Chinese individuals are, on average, still much poorer than Americans.
China would not be the first country to fail to achieve predictions that it would overtake the United States. In the 1980s, American politicians and experts feared that Japan would do the same. Japan, in part because of its demographic crisis, did not.
To demonstrate the challenges China faces to overtake the US, Douglas Irwin, a professor of economics at Dartmouth College, cited an analogy about learning organic chemistry, a notoriously complex subject. . Students can study and master an 800-page textbook on the subject, bringing them “closer to the intellectual horizon.” But then it will be much more difficult to write the next edition of that textbook.
“The former was hard enough,” said Irwin. “The latter is extremely difficult.”
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