The future of China

N.B this isn’t a subject I know a huge amount about. But since I was recommended to write about it awhile ago, I’m going to give it my best shot. Also bear in mind that this is very much from a Western perspective. 

The rise of China is a very contentious subject in the West, particularly in the United States; Americans largely see China as a threat to their world power status. On the one hand, Chinese manufacturing has raised our standard of living considerably, by allowing us to buy their cheap products instead of our own expensive ones. The growth of Chinese consumer demand is a much-needed market for our own manufacturing sector. Chinese tourists have been a boon to our cities and historical sites. Chinese foreign students have lavished our universities with cash, subsidising costs for domestic students and providing investment for new research.

However, Chinese success has to an extent, come at the expense of the developed world. Partly through direct intellectual property theft; the most notorious example being the stealing of Japanese high speed rail technology. China has disregarded WTO rules on issues like steel dumping. Their manufacturing costs have been lowered by paying their workers poverty wages and disregarding environmental standards. On the whole, Chinese prosperity has been enabled by prioritising economic growth over individual wellbeing. Working hours are long, health and safety is scant, and workplace deaths are all too common.

Anti-Chinese sentiment contributed to the success of Donald Trump, who has promised to enact tariffs on Chinese made products. So far, he has yet to keep his word, mostly because his advisors have warned of the damage a trade war would do to the US economy. Trump’s anti-Chinese rhetoric was at times xenophobic, with no appreciation for the nuances of the debate, like the legitimate desire of the Chinese to prosper in the global economy. He critique of Chinese protectionism was obviously hypocritical. And his overall view of the world order as a zero-sum game, with Chinese (or Mexican) growth necessitating American decline, is an inaccurate view of a world where generally speaking, living standards have gone up for everyone.

The consensus amongst economists is that China’s rapid economic expansion will come to an end, sooner or later. The debate is how that will happen. There are two views: the hard-landing view, where China experiences a sudden crash, causing a global recession, and the soft-landing view, where GDP growth gradually slows as the population ages, welfare costs rise, and a renaissance in American manufacturing brings some jobs back to the US. My personal view is that the soft landing scenario is more likely. If there is a sudden crash, it could threaten the power of the Chinese Communist Party, so they won’t allow it to happen. The Communist Party is determined not to go the way of the Soviet Communists, where economic malaise and a lack of dedication to socialist ideals brought the regime down.

Given that Chinese growth will inevitably slow, there’s no need for a Trump-style adversarial relationship with the country. We should lower tariffs on Chinese goods, on the condition that they lower tariffs on ours. As the Chinese economy becomes more dependent on consumer demand, we should use this to get the Communist Party to open up the country further, which I believe will be beneficial for both us and them.  But if we appear hostile to China, the Communist Party will insulate the country, a move which we will ultimately pay for.

The left wing objection to China is the country’s woeful record on human rights, mostly notably the occupation of Tibet. Lesser known abuses include their criminal justice system with its frequent executions, as well as its persecution of other ethnic minorities, especially Muslims living in the west of the country. China’s Christians are hardly in a good position; the recent rapid expansion of Christianity has rattled the Communist Party, which officially adheres to a doctrine of state atheism. All of this is true, but it doesn’t warrant any acts of anti-Chinese hostility or protectionism. If we didn’t trade with any countries with poor human rights records, we couldn’t buy any oil from the Middle East or gas from Russia. The reality is we must buy from those we don’t necessarily approve of. Retaliation against the Chinese would only be viable if the country actively threatened us militarily. But that probably won’t happen, so relations with China ought to remain cordial for now.

 

  • An excellent overview. Congratulations, Owen. Very well balanced and nuanced. I don’t think you need the introduction saying your knowledge about the subject is not very great.

    I would add that historically, when a dominant power, that has pledged help and assistance to lesser powers, is challenged, the emerging power seldom challenges directly, but picks off old allies. China is doing this in S. E Asia and Africa already. It usually leads to war, even if it is war by proxy. With Trump in power things could get very scary.