“I’ve Seen the Future, and It Works!”:
Why China’s Rise is Not Inevitable
Penulis: Trystanto
Anyone who speaks with great certainty [about China] needs their head examined — Pieter Bottelier, Senior Adjunct Professor of China Studies at the School of Advanced International Studies, John Hopkins University
It has been a recurring theme that we have heard for the last decade: when China will overtake the US as the world’s premiere superpower and predictions regarding China’s future. From Martin Jacques’ When China Rules the World to Gordon Chang’s The Coming Collapse of China, these scholars, politicians, academics, commentators — or psychics, as what I like to call them — behave like they have the time stone in their infinity gauntlet, or that they work in the Time Variance Authority from the movie series Loki. All these works portray the same theme: they try to predict the future in a very fluid world. Even though they often times paint a rosy picture — or dark picture, depending on your position — nothing can be further from the truth: they rely on a fallacious assumption that the world’s status quo will remain, and nothing could be done to alter that course. I argue that China’s upcoming climb to supremacy is not inevitable as the future of the world is very uncertain.
In the very beginning of the Social Science: The Basics class, my professor, Mohtar Mas’oed, postulates that social sciences can only be used to explain the current social phenomenon and not to accurately predict the future. Frick (2015) agrees, noting that “[n]umerous studies detailed the forecasting failures of even so-called experts.” This is the very basic fundamental basis in social sciences. And yet, these so-called ‘experts’ seem to have forgotten these fundamentals. One reason we could not make a prediction in social sciences is that it is extremely difficult to predict the future of a world where there are infinite factors that work together to create the status quo, and one changing factor could alter the whole house of cards. That is why there are extremely few ‘laws’ in social sciences, unlike natural sciences.
If we look deeper into each ‘predictions,’ nearly all of them present their predictions based on the status quo and presume the status quo would run long into the future without any aberrations. One example is this chart from the BBC (2020) based on the Center for Economic and Business Research’s World Economic League Table 2021:
In the chart, we could see that the line after 2020 is almost straight. Therefore, the chart assumes that the trajectory — in this case, the US and Chinese economic growth — would remain the same. As a consequence, the chart does not factor in the many factors that could tore up the status quo. The Center for Economic and Business Research (2020, p.71) even makes a bold assumption that “[w]e expect the trend rate of growth for China to be 5.7% annually from 2021–25 and 4.5% annually from 2026–30 and 3.9% annually from 2031–35” as if there will be no cataclysmic event that could rock the world’s economic growth. For example, no one in November 2019 could have predicted that there would be a pandemic just 4 months later. Therefore, “[b]eyond the next five to ten years, no forecast is better than a random guess, because too much can change in the intervening years, as the cycles of economics, politics, and technology turn. The long run is a myth” (Sharma 2020, p.80).
In the specific case of China, it is safe to say that its trajectory is extremely unpredictable. Many predictions about China have been proven to be false. Gordon Chang’s (2011) prediction that China will collapse in 2012 has been proven false. In addition, the IMF’s prediction in 2011 that China will surpass the US in 2016 (Arends 2011) has also been proven incorrect. All these predictions have one thing in common: they highlight the factors that could make their predictions a reality and assuming no one will make changes that will produce a different outcome. For example, Gordon Chang (2001) highlights the problem of Chinese corruption and the problem that it can cause as one of the primary causes of China’s collapse. However, he does not factor in that in the future, Xi Jinping would harshly treat those that is corrupt with improvements in China’s corruption perception index (Transparency International 2020).
Furthermore, the Chinese economy is facing heavy headwinds ahead. Most notably, many factors of China’s success could only be done once. Magnus (2018, loc.2669) says it best:
In any event, there are many things that China has proved successful at doing in the past, but which it can no longer repeat because they were one-off accomplishments. For example, China could only join the World Trade Organization once… It could only enroll all of its children in secondary school once. Exploiting the demographic dividend, benefitting from rural-urban migration, and raising the share of employment in industry and manufacturing to peak achievements were all achievements that could only happen once.
As a consequence, we should not expect China to be able to repeat the ways, and this means the country had been able to do previously to achieve marvelous economic growth.
In addition, for nearly 30 years, the Chinese economy has benefitted from a relatively calm and friendly international geopolitical and economic environment. A combination of the ‘hide your strength, bide your time’ strategy, the existence of a China-friendly US, the eagerness to invest in China for Western companies, and the comparative advantage of China’s labor force and natural resources all work in tandem to produce a stunning economic growth. However, the times are changing. China has recently abandoned the ‘hide your strength, bide your time’ principle and are now engaging in political showdowns around the world (Trystanto, 2021). Nor has the United States maintain its China-friendly posture after President Trump launched a trade war with China in 2018 (Magnus, 2018, loc.3222). Worse, President Biden has actually mobilized its allies to mount a multilateral confrontation to the Chinese rise starting with the Quad, which could endanger China’s ambitions (Rudd, 2021). In addition, US and Western businesses are less keen on investing in China due to issues ranging from forced technology transfer, lack of transparency, lack of intellectual property protections, and lack of data security (Mahbubani, 2018, pp.29–30). Lastly, compared to its neighbors, Chinese laborers are no longer cheap to employ with its average hourly salary reaching five times that of an average Indian labor worker (Yan, 2017).
However, perhaps one of the most damming challenges that China could face is its demographic and debt crisis. Even though previous estimates suggests that the Chinese population would grow until at least the next decade, a recent article at the state-run Global Times shockingly confirms that the Chinese population would start to decline by 2022 (Hui and Fandi, 2021). With its elderly population on the rise and a falling birth rate, China could face lower productivity levels and thus, a lower GDP growth as a result. Furthermore, Thomas Orlik (2020, p.1), chief economist at Bloomberg, postulates that the Chinese debt-to-GDP level has reached 260% of GDP and that ‘[t]hat borrowing has kept the wheels of the economy turning…” In addition,
…In the years before the 2008 crisis, 100 yuan of new lending generated almost 90 yuan of additional GDP. In the years after, that number fell below 30 yuan. More and more credit was [sic] required to produce less and less growth [emphasis added] (Orlik 2020, p.3)
Thus, China is currently a developing country with a developed country-level debt-to-GDP ratio, an economy dependent on debt to keep on running, and a demographic crisis. In other words, it is highly improbable, fallacious, and maladroit to forecast China’s future with certainty based on the status quo.
So, is this it? Is this the end? Will Gordon Chang get his final laugh? Not necessarily. In the same manner that it is clumsy to predict the future based on the status quo alone, it is also fallacious to assume that the Chinese government will acquiesce and do nothing. Common sense would argue that given the challenges, the Chinese government would do everything it can to fix the problem. As Allison (2018, p.143) claims that China is a “responsive authoritarianism” state, it is safe to say that China will respond to the problem that it faces.
To conclude, as social sciences cannot be used to accurately predict the future, it is extremely inept to accurately predict China’s future based on the factors that made up the status quo and assuming that the status quo would go on forever in a heavily dynamic and fluid world. As the Chinese economy is facing several challenges and many of the factors of its success are methods that could be done only once, it would be impossible to accurately predict what China will do next. Furthermore, China will respond and try to come up with solutions to address the maladies that it faces. As a consequence, will China collapse, or will it be the world’s premier superpower? Only time will tell.
References
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