Instead of confronting China’s rise, we must manage its decline

Xi Jinping

Nations, like people, have reputations, and in both cases there can be gaps between the rep and the reality.

China is known as the sage of nations, strategically patient, thinking in terms of centuries while the West flits about like a toddler in a toy store. Current events are forcing a reappraisal, however, as China careens wildly — and very dangerously — from one bad decision to the next.

Start with the Chinese Communist Party’s authoritarian U-turn after a generation in which China’s gradual opening produced extraordinary growth and modernization.

Under the power-hungry leader Xi Jinping — who is abandoning the term limits honored by his recent predecessors to hold the reins indefinitely — the CCP is exerting state control over economic activity in ways that are rattling the confidence of global investors.

Aggressive moves to stifle the Internet have drained more than $1 trillion in value from Chinese tech companies this year. In July, the State Department warned U.S. businesses of a souring commercial climate in Hong Kong since Beijing’s crackdown there.

Domestically, the CCP is flailing to defuse the demographic time bomb unleashed by the party’s foolhardy decision in 1979 to limit Chinese families to a single child.

A preference for boys has created a nation of bachelors, which thwarts government efforts to reverse the damage. Runaway health costs and declining growth are the likely consequences of an aging population.

China’s Belt and Road Initiative to create a 21st-century infrastructure for eastern trade looks increasingly like a scheme to saddle weaker partners with debt while keeping China’s construction industry occupied.

Meanwhile, the unmanageable domestic debt racked up to overbuild infrastructure at home has financial markets around the world quaking.

This from a government that continues to oppress the Buddhists of Tibet while forcing Uyghur Muslims into concentration camps. Fearful of losing its grip, Xi’s Communist Party has slammed the brakes on an open China and is pulling the nation back toward tyranny.

China’s problems would be China’s province but for one important fact. Xi appears to be flirting with his worst decision yet, one likely to cause worldwide pain, or worse. In recent days, China has been filling the skies over Taiwan with warplanes, leading Taiwan’s defense minister to warn that Beijing may be preparing to exert control over the breakaway island by force.

Defeated by the Communists in a long civil war, the Chinese Nationalist government fled to Taiwan in 1949, and the status of the island has been in dispute ever since. Relatively open and democratic, Taiwan raced ahead of the communist mainland in its economic vitality.

But as China appeared to be catching up, many observers believed that a peaceful reunification might lie somewhere in the future. That would be the patient strategy — to let China grow in terms of human rights and economic freedom, thus making Beijing’s “one China” policy palatable.

But with Xi and the CCP swinging back in the authoritarian direction, the prospect of a peaceful resolution is receding, replaced by shows of force. The United States is committed to protecting Taiwan from invasion.

A small number of U.S. military trainers have been dispatched to improve the readiness of Taiwan’s army, and the recent decision in Washington to sell nuclear submarines to Australia is a further sign of concern about Beijing’s intentions.

The possibility of a shooting war between the world’s leading economies over Taiwan, so unlikely before Xi, now cannot be ignored Though the Chinese leader boasts of his nation’s unstoppable rise, Xi’s swelling record of poor choices suggests that he fears the future and will act impulsively to try to change it.

This nation that supposedly thinks in centuries is now issuing sweeping fiats on a seemingly weekly basis. Xi is causing the world to recalculate the risks of doing business with such an unpredictable nation.

The “narrative of China’s inexorable rise can and should be challenged,” analyst Logan Wright of the Rhodium Group wrote with colleagues in 2020. “Growth in China continues to depend upon increasingly inefficient state-led and bank-financed investment. … China’s potential growth and productivity growth are slowing.

Demographic changes mean a shrinking labor force in the coming decade, and productivity has been hampered by a financial system that continues to keep bloated state-owned enterprises and local government firms afloat.”

Xi, 68, won’t last forever. But as long as he is ruler, the United States and its allies must move carefully to limit global exposure to Chinese mismanagement and deploy every tool short of war to deter rash action by China against Taiwan.

A whole new way of thinking is required. Western policy has long been shaped by China’s rapid ascent, but that could be child’s play compared with confronting a China in decline.

Source: Washington Post

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