Acton Institute Powerblog

Despite displays of strength, China has key weaknesses

(Image credit: Associated Press)

It’s easy to worry over China’s increasing bellicosity and economic strength, but its demographic woes, regional challengers, and declining productivity provide new opportunities for the West and its allies. […]

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The recent announcement that China had tested something akin to a Fractional Orbital Bombardment System, which is launched into space and then orbits the globe before discharging a missile at its target, underscored yet again that America and its allies have serious grounds to be worried about China.

Whether it is Beijing’s extinguishment of Hong Kong’s special status, bellicose tone regarding Taiwan, ongoing theft of intellectual property from Western companies or inflicting jail sentences on dissidents like Jimmy Lai and Martin Lee, these are signs of a regime determined to throw its weight around.

These and other developments over the past 10 years have forced the United States to rethink relations with its Pacific partners. Part of that repositioning naturally involves considering how to counter China’s strengths. But part of the realignment should also involve reflection upon China’s present liabilities.

One-child policy didn’t pay off

The first and most pressing problem facing China is demographic. Having embraced the population bomb lie propagated by most development economists, the United Nations, and numerous Western governments in the 1960s, ’70s and ’80s, China is now paying a significant price for the one-child policy it followed between 1980 and 2015.

China’s working-age population is forecast to shrink by 170 million people over the next 30 years. That means more retirees being supported by a smaller base of workers. It will also result in China spending more on aged care, social security and healthcare. This will weaken consumption demand and diminish China’s capacity to bulk up its military expenditures as well as research and development.

Then there is the gender disparity resulting from numerous Chinese families having aborted female babies in favor of male babies. Many young Chinese men won’t be able to find a wife in the near future. That is a recipe for social cohesion problems.

State-driven economy isn’t thriving

China’s second major problem is its economy. The Chinese economy is losing momentum as a result of its shift away from the limited market liberalization permitted between 1979 until the mid-2010s and China’s subsequent reembrace of state-driven approaches to economic growth.

All the dysfunctionalities associated with government-driven economies — industrial policies that breed cronyism and corruption; severe misallocations of capital by state-controlled banks; the deterioration of the disciplines associated with domestic and international competition, to name just a few — are now rolling through the Chinese economy.

Productivity is falling and growth is diminishing. It is telling that, since the mid-2010s, China’s National Bureau of Statistics has steadily reduced the amount of information it makes available about the state of China’s economy. It’s as if they have something to hide.

This trend reflects a major political problem facing China, perhaps best called domestic sclerosis.

In the 1980s, China’s then-paramount leader, Deng Xiaoping, introduced political changes designed to facilitate regular personnel changeovers in the Chinese Communist Party’s higher ranks. The objective was to inject new ideas and youthful energy throughout the government. This, however, has been undercut by President Xi Jinping’s recentralization of power in the CCP’s higher ranks and regular purges of anyone venturing even mild criticisms of official policy.

Truth about government grows rare

hese changes have corroded something needed by any government: a willingness to entertain fresh thinking. At some level, all regimes depend on individuals unafraid to make the type of critique that leads to policy adjustment and corrections. Xi’s stance, however, has encouraged a growing reluctance to tell the truth. To do so might seriously compromise many a young party apparatchik’s career prospects.

Part of its efforts to promote more centralized control has involved Beijing stoking nationalist feelings throughout China, particularly among young people. This has resulted in ever-tightening censorship, as well as systematic punishments of groups like Uighur Muslims, crackdowns on political dissidents and the demolition of any religious activities that implicitly challenge the CCP’s authority.

There is a price to be paid for all this. The feedback mechanisms that would help Beijing know what its people really think are being degraded. This breeds greater insecurity within the CCP. The result is further clampdowns on dissent. China is thus entering a vicious circle whereby repression produces silence, silence creates insecurity and insecurity makes the likelihood of more repression even greater.

International response hasn’t been rosy

Looking outside China, Beijing finds itself confronting some formidable challenges. Its belligerent actions and words have generated at least two new sets of alliances directed at containing China. One is quaintly called the “Quadrilateral Security Dialogue” — colloquially known as “the Quad.”

Consisting of America, Japan, India and Australia, this was recently reestablished as part of an effort to respond to China’s growing economic and military power. We know that this is the objective because Chinese officials loudly protested the Quad’s reemergence.

Paralleling this was the announcement in September 2021 of a new trilateral security pact between Australia, the United Kingdom, and the United States (AUKUS). There is no doubt that the big three Anglosphere nations have drawn a line in the sand and will now work even more closely to counter China’s growing influence in the Indo-Pacific region.

This, however, isn’t the end of China’ geopolitical headaches. Think about it this way: China is bordered by 14 countries; four of these have nuclear weapons; five have territorial disputes with Beijing. Some of these nations are significant regional players.

Every year, India is becoming militarily and economically more powerful. Japan is aging, but it remains wealthy and possesses a strong military. To Beijing’s north, Russian President Vladimir Putin is busy trying to restore Russia to something akin to its pre-1991 place in the world. When combined with a highly unpredictable North Korea and a Vietnam that showed back in 1979 that it wasn’t going to be pushed around by China, Beijing’s strategic settings are hardly optimal.

That China represents an increasing threat to America’s national security is indisputable. But responding to that challenge requires realistically assessing not only China’s strengths but also its weaknesses.

The latter are deeper and wider than we realize. While they require careful handling, they also represent opportunities for America that we would be foolish to ignore.

This article originally appeared in The Detroit News on Nov. 4, 2021

Samuel Gregg

is director of research at the Acton Institute. He has written and spoken extensively on questions of political economy, economic history, ethics in finance, and natural law theory. He has an MA in political philosophy from the University of Melbourne, and a Doctor of Philosophy degree in moral philosophy and political economy from the University of Oxford.