The Buzz

The Decline and Fall of China’s Long View

China is often credited with taking the long view to achieve its strategic goals; however, that luxury may be coming to an end. There is an oft-quoted story about former Chinese Premier Zhou Enlai, who, when asked about the effects of the French Revolution on China, demonstrated the Chinese long view by answering, “It is too soon to tell.” U.S. strategists, on the other hand are often limited in their ability to plan beyond the current administration. They have watched China slowly grow in power, both militarily and economically, over the last few decades with an arguable long-term goal of displacing the United States as the dominant global power, all the while focusing their own efforts on wars in the Middle East. China has remained in the shadows of global security, rarely venturing out to address even regional challenges, hoping their gradual, long-term, hegemonic rise would become a fait accompli. That hope may now be at risk.

 

Demographics

A booming population with scarce agricultural resources led Chinese leaders to adopt a One-Child Policy in 1979. While this policy mitigated exponential population growth and prevented a Malthusian catastrophe, the effect is an aging demographic that will weigh heavily on Chinese power/control in the coming decades. In short, a relatively small under-30 crowd will have to support a much larger over-70 crowd. The ramifications are already being felt. In 2012, China’s workforce decreased by 3.5 million and is forecast to continue its decline. Some estimates indicate that by 2020 Shanghai, a city with almost 15 million people, will have a population in which fully one-third will be over age 60. Additionally, the Wall Street Journal estimates that by mid-century the population of China will consist of 186 single men for every 100 single women, a recipe for increased crime and dissension, (as well as a continued declining birth-rate). China’s ability to maintain a self-sustaining workforce is waning rapidly.

 

A Slowing Economy

China experienced a meteoric rise in its economy, reaching years of continued growth in excess of 10 percent. Those days are over. China’s most recent quarterly growth was just under 7 percent, with projections continuing to decline over the next decade and beyond. Why does this matter? If China wants to become a global power, it will need the funds to do so. That money must be used for external investment, military procurement and continued infrastructure development. Sustaining the growth of China’s military and economic power will become more difficult, and will soon begin a slow and potentially unrecoverable decline.

 

The Middle-Class Trap

A third factor contributing to China’s slowdown is a phenomenon called the middle-class trap, whereby a country transitions from a poor to middle-class economy through basic manufacturing and textiles. The difficulty lies in developing those skills to take industrialization to the next level, such as providing education and training for the new industries. China has been unable to develop its education infrastructure to meet its requirements. The wealthy are able to send their children overseas, and China sends over a quarter million of its students to U.S. colleges and universities. However their inability to meet educational demand domestically will limit their ability to meet professional domestic requirements, thus limiting their ability to make the transition to an advanced economy. Basically, China is great at making “things,” but how much has China actually developed? Of course, as the middle class increases, and wages improve, industries in search of cheap labor migrate elsewhere, such as Indonesia, Malaysia or Vietnam, leaving China in search of employees and incapable of continued development. While not inevitable, many Latin American countries such as Brazil have fallen into this trap. They cannot compete with countries with greater capabilities in more technology-intensive goods and services. Because like China, they have never developed the policies and institutional environment to make the leap to high-tech or industrial economic development—what is often referred to as industrial policy.

 

Rising Pluralism

Pages