A More Realistic Look at China
The Pew Research Center recently released a 21-country survey showing that 41 percent of the respondents viewed China as the world’s dominant economic power. That was one percentage point more than those who thought the same of the United States. The Pew survey was just the latest one to measure the ways in which the broader public was making sense of the changing global dynamics. Back in 2009, another Pew poll found that 44 percent of Americans believed that China had already moved to the top.
Although China’s economy is still roughly half the size of America’s, one can certainly see why so many people would have such misconceptions. China’s economic footprint expanded greatly in the past decade; it weathered the global financial crisis relatively better than most others; and, it dazzled the world with new airports and fast trains—obviously, a powerhouse had arrived. Even if one knew the facts about China’s growth, it was hard to escape the discussion of the “inevitable”: when will China become No. 1?
Yet, aside from gaining some general impressions of how the public views China and setting broad projections for planning purposes (whether to form policy responses or examine market potential)—assuming things proceed in a straight line—what, if anything, do these surveys and reports tell us about China and its near-term trajectory?
- They do not capture the challenges facing Beijing as it attempts rebalance its economy. As the United States, Europe, and Japan absorb fewer goods from China, Beijing can no longer rely on its export-oriented growth model and must elevate domestic consumption to make up the difference. Consumption currently makes up only about 35 percent of China’s GDP. As Michael Pettis of the Carnegie Endowment explained, domestic rebalancing will likely mean much slower growth for China.
- They do not consider China’s own debt problems. The flip side of having a low-consumption economy is one dominated by investments. These include massive building projects and infrastructures, even ones with questionable returns. In order to boost economic growth rates, local governments in China have reportedly amassed high levels of debt. Local government debt level in Chongqing, the city once led by the recently ousted Bo Xilai, could be as high as 100% of gross regional product.
- They do not factor in China’s coming demographic challenges. Over the past four decades, China benefited from its seemingly limitless supply of cheap labor—robust population growth rates and high number of able young workers ready to arm the manufacturing machine. That is coming to an end. Annual population growth has slowed—from 1.07 percent (1990-2000) to 0.57 percent (2000-2010). And the population is rapidly aging, too, and the country may grow old before it gets rich.
- They do not reveal the degree to which Chinese leaders are worried about the domestic stability of their country. Many outside of China assume that the country’s leadership had successfully struck a grand bargain with its people, keeping down dissent by executing an efficient, centrally-planned economic growth program. But “mass incidents” have been rising for many years (numbering 120,000 to 180,000 per year), even in times of economic growth, and the Chinese, especially those born after the 1980s, are much more rights-conscious and assertive than before.
- They do not provide any insight into how Chinese leaders will respond to the challenges in the coming years and decades. Is China’s one-party authoritarian regime capable of managing the problems arising out of an increasingly complex social, political, and economic context? Going forward, how will such a governing structure handle and balance its society’s different and often competing demands, needs, and special interests?
Given all of this, if there is one thing that the aforementioned reports and surveys do reveal is that it is perhaps useless to speculate, guess, or project where China will be in 10, 20, or 30 years. No one knows.
What we do know, however, is that policymakers, commentators, and all others charged with the duty to inform must do a better job of “connecting the dots” for the public. Countdowns and talks of the inevitable may be interesting infotainment, but they make lousy public policy, and do nothing to inform and engage the citizenry.
An honest and realistic assessment of China’s internal challenges is crucial if we are to understand Beijing’s intentions and insecurity, its policies’ impact on the globalized economy, and, ultimately, what type of power it will be within the existing international system of governance.
Anka Lee is a Truman Security Fellow.