TOKYO — Most Western predictions about the future of China’s rise are ominous, ranging from theories about how the country will perfect an authoritarian society to how it will serve as a model for a less free future.
But while reporting in Japan on Wednesday, I heard the most troubling prediction about China yet — and it was actually about the country’s decline.
“If the central government runs out of money, then they’re in trouble,” Akio Takahara, one of Japan’s leading scholars on China, told US-based reporters. “If you talk to the Chinese people, they’ll tell you that this [system of government] cannot last forever. So someday there will be a big change, but they don’t know when, they don’t know how, or what the process will be,” Takahara said.
And, he added, it won’t necessarily be peaceful.
There are two worrying things packed into that analysis, so let’s take each in turn.
First, on the surface it seems impossible that China — the world’s second-strongest economy — would run out of cash any time soon. But there are signs that China is undergoing a significant slowdown, partially because of President Donald Trump’s trade war.
Some economists have long held that China vastly inflates its economic growth rate, which officially stands at 6.5 percent right now. But the predictions are getting more dire, with one Chinese economist predicting that China’s real growth rate is zero. If true, that could cause significant problems for Chinese President Xi Jinping and put strain on the Communist Party’s hold on power.
Second, the US and other countries for decades hoped that engaging China would prompt it to open up its economy and eventually become a more democratic society. The hope, though, was that shrewd management of China’s transition to democracy would make it relatively painless — and even bloodless.
But the trade war and the Trump administration’s antagonism toward Beijing has changed all that. It’s pretty clear the White House wants to cripple China’s economy to the point that its government, led by the Communist Party, collapses. If that’s the case, it could turn into one of the world’s worst humanitarian catastrophes.
China is home to more than a billion people, many of whom would prefer to see the party maintain control. Others might try to leverage the government’s weakness and violently revolt against it. A civil war on a scale never seen before in human history is therefore sadly a possibility — albeit a very small one.
Nonetheless, “it’s frightening to think about,” Takahara said.
Managing China’s decline would be precarious
The main takeaway from Takahara’s comment, at least for me, is that dealing with China’s potential decline could prove just as challenging as its rise. Because China is so important to the global economy, few want it to ultimately collapse, but Washington doesn’t want Beijing to surpass its power, either.
The US has yet to figure out how best to find a middle path, so to speak. The engagement strategy employed from Richard Nixon to Barack Obama didn’t fully work because it helped make China much stronger with little societal opening, and Trump’s trade deal may make things way worse by taking the global economy down with Beijing.
That means the US has yet to figure out how best to deal with China. That’s a problem, as China’s own instability could force the US to make up its mind sooner rather than later.