The Washington PostDemocracy Dies in Darkness

Opinion China is weaker than we thought. Will we change our policies accordingly?

Media staff work in November 2021 next to TVs airing a speech from Chinese leader Xi Jinping. (Str/AFP via Getty Images)
5 min

In late 1992, I started my first full-time job, as managing editor of Foreign Affairs. I remember sorting through manuscript after manuscript arguing that Japan was going to take over the world. That claim was not unusual at the time. A big bestseller of the year was Michael Crichton’s novel “Rising Sun,” a call to arms for economic war with Tokyo. In 1991, the book “The Coming War With Japan” predicted inevitable and major military conflict. During the 1992 presidential primaries, one of the pithiest campaign slogans came from Democrat Paul Tsongas. “The Cold War is over,” he would say, “and the Japanese won.”

What is striking about these words is that they all came well after the crash of the Japanese stock market, which fell from its peak in December 1989. We now mark 1990 as the year that Japan’s giddy growth era ended. But at the time, people assumed this was just a temporary interruption. They saw the data but then returned to their old thinking.

Could we be seeing something similar happening with China these days? It seems clear that China’s growth is stalling. The country that since 1978 has grown at an average of over 9 percent annually is projected to grow about 3 percent this year. Some think tanks have postponed their projections for when the country’s economy would overtake the United States to become the world’s largest economy to 2030 or later. Some experts are even suggesting that this might never happen, which is striking, given that China’s population is more than four times as much as the United States’.

There are many reasons for the new bearish mood about China: its draconian covid policy, real estate bubbles, debt and — perhaps most consequentially for the long term — a demographic collapse. (China’s fertility rate is now lower than Japan’s.) But above all looms the change of course away from the market undertaken by the Chinese government in the past 10 years.

China has grown at a stunning pace since 1978 because it embraced markets and trade. But Chinese leader Xi Jinping has moved the country to a very different model, one that views the state as the primary engine of the economy, identifying industries, providing funding and controlling the participants. And growth has stalled.

But if we can see that China is actually weaker than we had thought a few years ago, has that led us to change our conclusions accordingly? No.

Just as it is becoming clear that Xi’s embrace of the state and his “Made in China” industrial policy are not working, Washington has been busily implementing its own version of Chinese-style industrial policy. The situation is reminiscent of the late 1980s, when Americans spoke enviously of Japan’s Ministry of International Trade and Industry — a ministry that was in fact in the process of making a series of expensive bets on industries that flopped.

China doesn’t just face economic challenges. Xi’s foreign policy has mostly been a failure. His expansionism, bluster and repression have produced quantifiable results. Unfavorable views of China have skyrocketed in recent years to all-time or near-all-time highs in several countries, according to a Pew Research Center survey. From Australia to Spain, countries that were once favorably inclined have shifted away from Beijing.

China’s foreign overtures have been duds, from the expensive and messy Belt and Road initiative to its effort to woo Eastern Europe. The latter project, China’s 16+1 group, is fizzling because of countries’ disappointed expectations and Beijing’s relations with Moscow. And yet, in a move reminiscent of America’s misguided efforts to counter Soviet influence anywhere — even if that meant allying with dictators in remote countries of Africa — Washington has been frantically wooing Palau (population around 18,000) and other tiny Pacific Islands from Beijing’s embrace.

The basic argument for a hyper-hawkish policy toward China has been that China was rising fearsomely and that is what made it so dangerous. Prepare yourself for a new argument: China is declining precipitously and that is why it is so dangerous! So even if the facts are the opposite of what was previously asserted, the conclusion somehow remains the same.

In fact, while declining powers do sometimes pose a threat, the general and obvious rule remains that as countries grow rich and powerful, they try to expand their political and military reach. Moscow in the 1990s, when its economy was collapsing, allowed Ukraine to become independent. Vladimir Putin, flush from a decade of high energy prices, invaded Ukraine. Scholars have tracked Chinese foreign policy and found that it turns inward in periods of weakness and stress.

Let me be clear: China, with all its limitations, still presents a powerful challenge for the United States, the most serious long-term one by far. But right-sizing this threat and understanding it correctly are crucial to formulating the best strategy to tackle it. Instead, Washington’s conventional wisdom is still filled with exaggerated fears and fantasies of an enemy that is 10 feet tall.