China’s bad bets

Edward N. Luttwak
Edward N. Luttwak
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We now hear from assorted China experts that the Chinese economy is growing more and more slowly—not only because the population is getting older with the lack of babies, but because it is actually falling.

Therefore, they continue, China will not be able to achieve global primacy by 2050, contrary to Xi Jinping's promise to the 20th National Congress “to build China into a great modern socialist country that leads the world in…national strength and…influence.”

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Yes, it is true that there are very few babies in China, because on top of the normal decline of fertility that comes with economic advancement in most countries (including Iran), there is also the disastrous legacy of the Communist Party's brutal one-child policy that caused the killing of many baby girls (only boys perpetuate the family name), so that today's few young men have even fewer possible wives.

But in our days of Artificial Intelligence and robotics, it is no longer possible to predict China's economic future by looking at its declining population, or to see India as gaining superiority over China because of its rising population.

In fact, looking back we can recall several previous predictions of China's imminent stagnation because of one reason or another: When private enterprise was finally allowed after Mao's 1976 death and the economy grew quickly, many experts predicted that growth would soon slow because the Communist Party would not open “heavy” industry—iron, steel, and cement, but also things like tractor factories—to competition.

When the Party abandoned old industry (and Northeast China) to its fate beginning in the late 1980s, and the explosion in Chinese manufacturing and the export of clothing, shoes, and hand tools produced more fast growth, experts started talking about China falling into the “middle income trap.” This happens when countries can no longer compete in exporting cheap labor-intensive goods because their wages have increased by too much, and they cannot compete in higher value production because they lack the expertise and their productivity is too low.

But China jumped over this barrier too, for the simple reason that its mostly invisible investment in education was just as great as its very visible investment in high-speed trains, roads, airports, and giant container ports. Moreover, China's investment in education really has worked because it has never been limited to science and technology—from the start, it has included foreign and classical languages (15 Chinese universities teach Latin and Greek), philosophy, and world literature, with Xi Jinping himself being a European literature enthusiast. Thus instead of training imitative technicians, China could educate imaginative technologists.

All along, moreover, the Chinese currency and public finance have been controlled by experts highly respected in the West.

In all this, today's China has been true to its history: Until the Industrial Revolution in Britain, China was always richer than most other countries; in 1800, China comprised one-third of the global economy. With successive political disasters and the catastrophe of Communist economics, that number fell to only 5 percent by 1950. Now China is rising toward 20 percent of the world economy, and perhaps to an even greater share in the future, if there are no more big mistakes—like Xi Jinping's attack on Jack Ma (and all high tech), which Is still causing unemployment among new IT graduates.

But China will also be true to its history in failing to become the dominant world power, because its economic strength has always been accompanied by strategic failure.

Deluded over the centuries by their great material superiority over the nomads, mountaineers, and jungle dwellers who lived around them, educated Chinese became convinced—and still are—that all foreigners are stupid, naïve, greedy, and easily deceived, and that all it takes to defeat them in war are clever tricks.

Remarkably, they continued to believe this even as they were defeated again and again down the centuries by much less advanced invaders whom they hugely outnumbered. During the thousand years leading up to the fall of the Jurchen-speaking Manchus in 1912, it was only during the Ming dynasty from 1368–1644 that the Chinese were ruled by Chinese—very likely because the founder, Zhu Yuanzhang, started off as a monastery servant and was not miseducated by China's mandarins. In the 20th century, until the United States defeated them in 1945, the Japanese became the last of the badly outnumbered foreign conquerors to capture and keep Beijing, Nanjing, Shanghai, Canton, and as much more of China as they wanted, with both Communist and Kuomintang forces equally incapable of fighting them successfully. [Except in countless films.]

Today, no steppe warriors threaten Beijing, but the total strategic incompetence of its rulers persists.

Exactly when the deeply divided United States needs allies to contain China, Beijing’s foolish aggressions since 2009 has reversed Japan's previous turn toward neutralism (during the ascendancy of the Democratic Party of Japan, which is now extinct) and made it a stronger US ally. China has also pushed India away from “non-alignment” into an ever-closer alliance with the United States (without losing Russia) and forced Indonesia to give up neutrality to defend its offshore resources. Just this week, Philippine President Bongbong Marcos asked for a greater U.S. naval presence the very day he came back from a seemingly very successful visit to Beijing. As for Australia, after years in which it was enriched by China's huge imports, the Chinese somehow decided that they could force the Australians to obey their orders to close an Australian institute that studies Chinese strategy by stopping imports of coal, wine, and lobsters.

In other words, Chinese leaders still think that foreigners are naive, greedy, and easily manipulated. (In each case, Chinese diplomats in place have tried and failed to stop these policies, but in China the Foreign Ministry is very weak and mostly serves to disseminate propaganda, not to bring information in.)

It is not therefore American diplomacy but China's diplomatic incompetence that has provided the United States with allies from Australia to India via Japan to collectively outnumber China's population, exceed its economic capacity, and overpower it in any war.

Edward N. Luttwak is a contractual strategic consultant for the US government and an author.

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