AAPI Convention 2022


Pax Sinica is still a long shot

A foreign policy blunder could lead to the collapse of Chinese Communist rule and severe economic turmoil for the country

Vikram Byreddy Oct 18, 2021
President Xi Jinping at Chinese Communist Party Congress

Much ink has been spilled concluding that the 21st century would be a Chinese century given that it is already the world’s biggest economy (PPP). The United States’ 2008 economic crisis, defeat, and withdrawal from Afghanistan have accelerated these conversations around the world. However, China has humungous domestic challenges to overcome to truly establish a Pax Sinica.

China is no doubt an economic superpower. It is the world’s biggest trading nation with a trade surplus of $66 billion in its favor and it is the world’s supreme manufacturing power. Most of the present supply chains have their source in China. Notwithstanding tremendous achievements over the last 30 years when it lifted around 770 million people out of poverty, the next 30 years is fraught with tremendous risks and survival challenges for its Communist regime - demography issues, foreign policy missteps, a threat to its private sector.

Firstly, the one-child policy has created tremendous demography challenges for China. Women in China have a fertility rate of less than 1.3 (where 2.1 is the required replacement rate). Due to this, China is facing a rapid greying of its population before it became rich, which is quite alarming for its economic future. In the book ‘Stumbling Giant’, Timothy Beardson argues that demographics as the single biggest obstacle to China becoming rich and powerful.

China’s working population is forecasted for a steep decline in the next few decades. It is estimated that she would have an old and young age dependency ratio of 70 per cent - the number of people aged under 14 and over 65, compared with the rest of the population. It means that it will leave just 30 per cent of its population paying the tax for the economy. This will pose severe challenges in the workforce required and gigantic pensions could break the back of the Chinese treasury eventually.

Fall in fertility rates

The recent census showed a drastic drop in fertility sending grave signals to the Chinese government which reversed its one-child policy. However, due to the growing economic independence of women and the very high cost of raising a child, many couples are desisting from having any children at all, presently. History from Western Industrial nations over the last two centuries has shown that once the fertility rates fall under the negative territory, it is very hard to reverse it to positive growth rates. This translates to a significant downtrend in consumption patterns in the future, threatening the very economic engine of massive consumption activity which was responsible for China’s ‘economic take-off’.

Secondly, Xi Jinping’s strong-arm against the private sector has led to almost $1.2 trillion in market sell-off creating huge panic among entrepreneurs and hindrance for the free spirit of innovation. Companies like Tencent, Alibaba, Didi which are reflective of the rapid strides of the economic dynamism of China over the last decade or so, have been severely hit to toe the Community Party’s line. Xi Jinping has been critical of the growing sector of the private sector as he believed that it could grow into its own ‘locus of power’ threatening the supremacy of the Communist Regime.

Xi Jinping’s actions could have a large impact on the economic future of China. This is contrary to Deng Xiaoping’s ideology of freeing up the markets and harnessing the potency of private entrepreneur spirit which led to China being one of the poorest countries in the world to world’s premier economic manufacturing power – the trajectory of economic growth in just 30 years, unparalleled in human history. Hence, Xi Jinping could reverse the very foundations of economic growth over the last three decades.

China's misadventures

Thirdly, Deng Xiaoping's ‘Bide your time’ philosophy has been waved goodbye under Xi Jinping. Under the present leader, China has border issues with almost every neighbor leading to the consequence of ‘Imperial Overreach’. Borders with Japan, Taiwan, India are on high alert. She has transgressed maritime waters of Indonesia, Malaysia, Vietnam, Philippines to name a few. At the same time, it has intricated itself in Great-Power rivalry with the United States leading to a technological and military arms race which has made Asia a hotspot for the next threat to world peace.

The formation of QUAD, AUKUS; EU, and NATO declaring China as their number one foreign policy priority is a consequence of Chinese misadventures over the last few years. Along with this, the growing centralization of Xi Jinping’s powers could lead to foreign policy missteps with no checks and balances following the dictum of “centralization multiplies the costs of human errors.” i.e. The effects of failures increase as the system becomes dependent on the fallible decisions of a single person or a group. In a centralized system with an all-powerful dictator, lower-level officials often prefer not to convey uncomfortable facts to the leader— exacerbates the scope of crises with potentially catastrophic results in form of COVID, a one-child policy.

History is replete with examples recently in form of Germany and Japan in World War 1 and 2 where they overestimated their importance to determine the fate of world affairs and took aggressive foreign policy actions leading to their downfall and decline for many decades. Similarly, a foreign policy blunder could lead to the collapse of Chinese Communist rule and severe economic turmoil for the country.

Further, being a superpower has multiple facets as noted by many experts. It is not just economic might, but also hard and soft power to project its power abroad. No other country except the United States has three under its belt even now. Also, most of the technological innovation and financial supremacy still exist within the United States. Even the United States had to wait for almost the 1950s to become an economic and military hegemon for the 20th century which led to Pax Americana. 

It is still quite premature to determine that this century belongs to China in the truest sense. 







(The writer is a US-based independent analyst. The views expressed are personal. He tweets @ vikarna0)

email - vikram.byreddy@gmail.com


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