Is America Worrying Too Much About China’s Rise?

 

Recall the 2010 “Chinese Professor” television commercial from Citizens Against Government Waste. It depicted a futuristic Beijing classroom where students hear a triumphalist lecture on American decline. Despite (or maybe because of) its questionable economic substance, the ad really struck a nerve. (It currently has some 3 million YouTube views).

At the time, writer James Fallows called it the “first spot from this campaign season you can imagine people actually remembering a decade from now.” And I think he was right about that, probably because “Chinese Professor” tapped into both pre-Trumpian concerns America was no longer great and that fast-growing China was ready to surpass the United States as global hegemon just at the US surpassed Great Britain. Indeed, that angst probably gave added resonance to President Trump’s MAGA message, one that when he delivered it in the 1980s focused on Japan as the rising Asian threat.

Of course, Japan never quite got there although it remains a wealthy and technologically advanced nation. But what about China? It seems likely to play a massive role in much of American economic and foreign policy thinking even beyond the Trump presidency. But we need to be realistic about the many domestic challenges to its lofty aspirations. The Chinese certainly are. For instance, a new report from the Chinese Academy of Social Sciences highlights the downsides of the nation’s slowing population growth and eventual decline a decade from now. The report says “China’s negative population growth has become unstoppable” and that “the long-term population decline, especially with the aging of the aging, is bound to bring very unfavorable social and economic consequences.”

Also likely to bring about “unfavorable social and economic consequences” is Beijing’s move away from market capitalism in favor of surveillance state capitalism. Even with government’s vast largess — such as the Made in China: 2025 plan and the associated AI effort — is China really creating an ecology conducive to broad, cutting-edge scientific research and technological innovation? The Economist, in a piece “Can China become a scientific superpower?” reports thusly: “Some Chinese scientists fear that the corruptions and silences endemic in authoritarian states will hold them back from the breakthrough-making Nobel-winning heights.” The piece also ponders whether “you can get either truly reliable science or truly great science in a political system that depends on a culture of unappealable authority is, as yet, unproven.”

All the more reason for the thrust of American science and innovation policy to laser focus on our own capabilities — as enhanced through immigration, trade, public investment, and pro-entrepreneurial tax and regulatory policies — rather than worrying about how to suppress China’s rise. (Which, of course, doesn’t mean we ignore the business and defense implications of, for instance, technology theft). On this subject, let me give a bit of a recent Q&A I had with China specialist and AEI fellow Zack Cooper

Pethokoukis: I often think about what kind of economy is conducive over the long term to technological progress and for innovation, and then I see the direction of the Chinese economy. For example, their social credit system, where they are going to monitor people. To me that sounds like they’re moving toward an extremely oppressive more totalitarian state. Is that the kind of state long term that is going to produce lots of breakthroughs and innovations? If you’re a Chinese scientist with any flexibility about where you live is that really the kind of environment you would want to be in? In Silicon Valley they like talking about start-up ecologies and ecologies for growth. The social credit system and the totalitarian environment doesn’t sound like a very good ecology to me.

Cooper: That’s right. I think in a lot of ways if you’re trying to figure out what does the current Chinese system resemble most right now, what comes to my mind is the Soviet Union in the early 80s, where the leadership knew that they had a problem. At that time they knew that they were going to have to open up economically if they were going to spur the kind of growth they needed to compete in the future, but they also knew that politically it might not be possible. Now, the nation is in a particularly difficult situation where Xi Jinping has centralized power. He has said that he’s not going to step down after 10 years as his predecessors have, and yet if he fails in his efforts to spur growth it makes it even more difficult to replace him with someone who might have a different approach. So at the same time that Xi Jinping has centralized power he’s also made the system much more fragile. I think there are real problems in Beijing and I don’t think we should be so sure that they know how to solve them.

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There are 12 comments.

  1. dukenaltum Member

    Socialism is always fatal.

    • #1
    • January 21, 2019, at 12:51 PM PDT
    • Like
  2. TeamAmerica Member

    Should China’s weaknesses be a comfort to the U.S?

    Iirc, it was Mark Steyn who said that it is China’s weakness that should be our real concern. I.e., if China has an economic downturn, there is no other political party to blame or to replace the Communist Party. That, combined with a surplus of young men due to the one-child policy, creates a strong incentive for China to scapegoat a foreign nation like the U.S. or Japan, and to beat the war drums. A miscalculation by them in this regard could easily cause a spreading conflict.

    • #2
    • January 21, 2019, at 12:54 PM PDT
    • 2 likes
  3. Scott R Member

    Mark Steyn’s dismissal of China in “America Alone” (2006) – “They will grow old before they grow rich” – is too glib for such a complex issue, but it’s proving to be a sharper take than most. 

    No surprise there. 13 years on, much of that book reads like prophecy.

    • #3
    • January 21, 2019, at 1:00 PM PDT
    • 4 likes
  4. DonG Coolidge

    Not worried enough. China has a national industrial policy centered on steal, replicate, and subsidize. They are big enough (the size of the S&P 500 combined) to destroy whatever company they choose. We need firm rules to have a win-win.

    • #4
    • January 21, 2019, at 1:50 PM PDT
    • 2 likes
  5. Steve C. Member

    China? Too early to tell.

    History tells us centrally planned economies don’t turn out so well. But it also tells us the rulers of China will pivot on a dime to keep their phoney baloney jobs. I think they are pragmatic and they have learned an important lesson from the failure of the USSR. Don’t let ideology get in the way of successful policy.

    As for us, we already know the secret sauce. Now we just have to persuade our elites to believe it.

    • #5
    • January 21, 2019, at 3:50 PM PDT
    • 1 like
  6. Unsk Member

    We live in dangerous times. 

    China is in a precarious position.

    Trump is correctly asking China to change.

    China has been stealing our and others technology for a long time. It has been spying on us with impunity. It has rigged its currency and trading system against us in ways we can no longer abide. It is building life ending military capacities that could destroy our civilization. It is threatening it’s neighbors like Taiwan, Vietnam and India all the time. Today secret and ominous Chinese bases at the border with India were discovered that have all the markings of a nation ready to invade. It has imposed a draconian authoritarian social credit system upon it’s people that makes the term Orwellian seem quaint. It has taken the QE idea and amped our puny by comparison $3.5 Trillion money print to the equivalent tune of $50 Trillion and used that money to sucker numerous nations into loans that they cannot repay and have taken very strategic chunks of these nations as a result in the process. And yes Economist Chris Hamilton has been warning of a economic Chinese collapse for years because of their declining birthrate.

    All that said, China may not be able to change and change particularly to the level we would need to continue any kind of reasonable trading relationship. It’s system of government is simply too rigid to change, and it faces even before it’s population collapse problems huge shadow banking problems that have sent it reeling because of the 1-2 punch of Trump trade initiatives and the FED’s QE that have hurt the Chinese currency and have more importantly sent the economies of many of it’s trading partners into deep recession.

    High ranking Chinese have threatened war. The Chinese Leadership is boxed in. They are in a situation where their export model is collapsing on one hand while on the other changing their rigid communist system to reflect the new realities would rip the “Mandate of Heaven” from the Ruling Class and leave them vulnerable to retribution for their many, many sins against the populace. Not to take this situation seriously would be a grave mistake. Dictatorships, like China’s, in this kind of hurt often resort to War to gin up popular support in the face of insurmountable difficulties.

    • #6
    • January 21, 2019, at 4:18 PM PDT
    • 1 like
  7. OccupantCDN Coolidge

    TeamAmerica (View Comment):

    Should China’s weaknesses be a comfort to the U.S?

    Iirc, it was Mark Steyn who said that it is China’s weakness that should be our real concern. I.e., if China has an economic downturn, there is no other political party to blame or to replace the Communist Party. That, combined with a surplus of young men due to the one-child policy, creates a strong incentive for China to scapegoat a foreign nation like the U.S. or Japan, and to beat the war drums. A miscalculation by them in this regard could easily cause a spreading conflict.

    The recent sabre rattling with Taiwan has been particularly disconcerting. All it would take, is a large industrial accident to be blamed on sabotage to kick off a war of unification.

    When we’re talking about Trump’s foreign policies recognizing realities – like moving the embassy in Israel – how about full recognition of Taiwan? Taiwan (next to Japan) is America’s closest ally in Asia. Why not recognize it?

    • #7
    • January 21, 2019, at 5:52 PM PDT
    • 1 like
  8. Unsk Member

    Recognize Taiwan? You Betcha. At this point what is the downside? China is arming to the teeth and threatening Taiwan. There is now no point to the “One China” policy. The bloom is totally off the rose with placating China. There is no reason to placate China anymore. Are we to let China invade Taiwan and impose it’s Social Credit system? 

    Recognizing Taiwan would reflect global realities and would make defending our allies in that part of the world much easier. A missile defense system on Taiwan would be awesome. 

    • #8
    • January 21, 2019, at 8:01 PM PDT
    • 1 like
  9. I Walton Member

    China is a giant. It does not have to surpass the US in innovation and creativity, it can copy, improve, advance, and does not need to surpass the rest of us in everything or much of anything. It can do so in military technology which isn’t a market product. A slight decline in population need not harm China and may help it. The US and its allies must grow by being free. We do not need to fret about China, nor seize control of our economy from above under the mistaken notion that we must guide our economy’s future. We must free our economy from the stultifying top down, accumulation of organized interests who inevitably pull resources away from free innovation, and toward planned coordinated state driven innovation. China is a threat because organized interests in the US will use it, or any other thing such interests can organize centrally as an excuse to centralize control. Freedom works for us. Freedom will always work for us. Loss of freedom here or among our allies works for China. In the long term we’ll do fine if we remember why we did so well, why we are who we are. That has been under threat for some time now. 

    • #9
    • January 22, 2019, at 4:20 AM PDT
    • 1 like
  10. Steve C. Member

    I Walton (View Comment):
    China is a threat because organized interests in the US will use it, or any other thing such interests can organize centrally as an excuse to centralize control

    I disagree. People banging the drum about China are looking to feather their nests. People who lust for power over their fellow citizens plead for more government control.

    • #10
    • January 22, 2019, at 4:52 AM PDT
    • Like
  11. Manny Member

    Yes and no. They have challenges like any nation but a powerful communist country is always a reason to worry. Their male disparity might actually be real cause to worry. Frankly, I for one believe it is better to be worried about a foreign power who is not an ally than to be complacent.

    • #11
    • January 22, 2019, at 5:44 AM PDT
    • Like
  12. I Walton Member

    Steve C. (View Comment):

    I Walton (View Comment):
    China is a threat because organized interests in the US will use it, or any other thing such interests can organize centrally as an excuse to centralize control

    I disagree. People banging the drum about China are looking to feather their nests. People who lust for power over their fellow citizens plead for more government control.

    Read it again. I’m saying to decentralize, reduce the role of the centralizing state. Allow the free market to return to the dominance it had when we grew so rapidly.

    • #12
    • January 22, 2019, at 6:22 AM PDT
    • Like