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The auto show in Beijing is canceled. The reason: Covid. A look at the new infection numbers in the city leaves heads shaking, which has become something of a habit. There were 95 new cases on Wednesday. Incomprehension is followed by speculation – are there any signs that zero-Covid will soon be abandoned? Hopes for this have now been unmistakenly rejected by the Politburo Standing Committee in its first meeting after the National Congress.
At least Xi Jinping’s side is in favor of minimizing the damage to the economy. This will do little to reassure the people of Guangzhou, a city with over 2,000 new infections, who fear a lockdown as severe as the one in Shanghai in the spring. Nevertheless, our author team in China offers a bit of hope.
How will the US shape its future China policy? Regardless of the distribution in the Senate and the House of Representatives after the midterm elections, the US will continue to tighten its stance toward China. Democrats and Republicans are united in one thing: their negative view of China. Amelie Richter’s analysis discusses what can be expected if the Republicans take control of the House of Representatives and looks at what effects it also has on Europe.
How the path should be set for Germany’s relations with China was also the topic of a Parliamentary session in the Bundestag. According to the governing parties, the China strategy of the German government is to see the light of day this year – previously, it was scheduled for next spring. Read more about this in our News section.
Not long ago, many believed China’s growth to be unstoppable. Xi’s Covid policy proved the optimists wrong. After all, his primacy of ideology inflicted severe damage to China’s economy in recent months. In today’s Opinion, MIT Professor Daron Acemoglu talks about the fundamental problems of economics in an autocracy.
Hopes that China would soon announce a relaxation of its Covid measures were met with a stern rejection yesterday. “We must not relax the necessary epidemic prevention initiatives,” the newly formed Politburo Standing Committee said in its first meeting after the Party Congress. The approach is to be “steadfastly supported.”
Covid numbers have reached their highest level in recent days since the Shanghai lockdown in March and April. But the government does not want to admit defeat to the virus. The situation is becoming increasingly confusing. Authorities now try to avoid sending entire cities into lockdowns. Instead, there is a patchwork of districts or streets throughout the country, that are in lockdown.
Such compartmentalizations are often declared as “temporary control” or “silence” (China.Table reported). This makes it difficult to see the entire picture, but new outbreaks are reported in all major metropolitan areas. People are stuck in their homes and travel within the country is more difficult than ever, as hardly any cities let in travelers without quarantining them if they come from an area with infections. The capital of Beijing is taking a particularly harsh approach in this regard, as many residents currently report.
Analysts at Goldman Sachs believe that authorities will not be able to keep the situation up for much longer. On Monday, the economists wrote that, while relaxing Covid regulations is still months away, preparations are being made. The government needs to act because the cost of zero-Covid starts to become an unsustainable burden on the economy.
According to a report in the Wall Street Journal, the situation could be eased with a gradual approach. The US newspaper quotes sources close to the government, according to which the hotel quarantine and the subsequent isolation at home upon arrival in China, could be reduced slightly from ten to seven days early next year. Bloomberg and Reuters also quoted sources with similar statements. In addition, there are discussions of a slight reduction in the number of mandatory Covid tests in everyday life as early as this month. Some cities currently require people to be tested every 48 hours. This could be readjusted, according to the Wall Street Journal.
What definitely turned out false, however, was a series of reports last week. For days, rumors of a far-reaching departure from zero-Covid in the near future circulated. The stock markets also reacted to this. The realization of how unrealistic a rapid opening is, only set in after some delay. The population is hardly immune to Sars-CoV-2, and zero-Covid is state doctrine. A change of course requires both medical and propaganda preparation.
According to reports, preparations for a large-scale vaccination campaign that is apparently aimed at finally closing the vaccination gap among particularly elderly people are also underway. The goal is said to vaccinate 95 percent of all people over 60 at least twice. According to the latest available figures, 86 percent of the elderly are vaccinated twice, and access to effective Covid drugs is also on the agenda.
Another interesting finding of the report is that Beijing apparently hopes for help from the World Health Organization to sell a possible relaxation of Covid measures to its people. Since the early days of the pandemic, the WHO has classified the virus as a “global health emergency.” But if the WHO reconsiders that classification at its next meeting in January, Beijing could also reduce its own risk assessment of the virus for publicity reasons. The government, as the Wall Street Journal reports, would then consider classifying Covid only as a Class B infectious disease, rather than a Class A infection.
It seems clear that Beijing is playing out scenarios behind the scenes as to what a possible opening might look like. But hardly anything seems set. According to sources in the Wall Street Journal, it could take another year before life in China returns to a similar state as before the pandemic. To other observers, even this forecast seems far too optimistic. Joern Petring
The “red wave” failed to materialize for the time being – in the US midterm elections, the Republicans did not achieve the strong results polls had suggested in the run-up. In many states, the count is still ongoing; in the House of Representatives, it looks like a victory for the Grand Old Party (GOP). How the Senate seats will be distributed in the future is still open. Georgia still has a runoff election in early December.
What is clear, however, is this: US-China relations are moving toward more confrontation – no matter how the Senate and House of Representatives are distributed. Even though Congress is currently more polarized than it has been in decades, Republicans and Democrats are remarkably united on the China issue: both favor a tougher stance.
Other foreign policy topics, however, are less clear. The election campaign in the USA was dominated by domestic issues: Inflation, national security, abortion and gun rights were the defining issues for voters in their decision at the ballot. US foreign policy for Asia played no role. So what does a vote in Arizona have to do with life in Manila, more than 12,000 miles away? Potentially a lot, because the results of the US midterms may also have far-reaching implications in the Indo-Pacific region, where the US and China are competing for influence.
The outcome of the midterms can steer US foreign policy in the region in two different directions – decreasing or increasing focus. On the one hand, a Republican-controlled US House of Representatives after the midterms could mean less US involvement on international issues. Increased “isolationism,” like under former President Donald Trump, is not unlikely, says Asia analyst Joshua Kurlantzick of the US think tank Council on Foreign Relations (CFR). Trump still holds strong support in the GOP. The ex-president “is suspicious of US relations with many Asian partners whom he believes do not contribute enough to their own defense,” Kurlantzick wrote in a column in the Japan Times.
A Republican House of Representatives could reasses Washington’s current involvement in Asia, the analyst believed. This would include its relationship with South Korea, Japan, and other allies. The Republican victory could also affect US defense spending and military agreements and put pressure on the Biden administration to “reaffirm its position on Taiwan,” Kurlantzick said. A growing number in the GOP do not want to intervene in the event of a Taiwan invasion. US President Joe Biden pledged support to Taipei in the event of an attack several times this year. Washington’s Taiwan stance could become a significant point of conflict over the next two years.
A Republican majority in the House of Representatives could lead to a more confrontational approach to the Taiwan issue, says foreign policy expert Noah Barkin of the Berlin office of the German Marshall Fund (GMF). A“red wave” could also spark new China-related legislation in a Republican-led Congress. These have the potential to increase tensions between Washington and Beijing, Barkin said.
Trade policy and Taiwan are also expected to be on the agenda for the expected meeting between Xi and Biden on the sidelines of the G20 summit in Bali next Monday. It will be the first face-to-face meeting between the two leaders since Biden took office as President. The White House confirmed the meeting on Thursday. Biden said at a press conference on Wednesday that he will have much to discuss with Xi. High-ranking US circles said the Ukraine war would also be a topic. However, neither a joint declaration nor specific agreements can be expected. Rather, Biden wants to create a basis for joint relations.
However, a GOP-led Congress – and possibly Senate – could also shift the Biden administration’s focus toward foreign policy issues if significant steps in domestic policy are off the table. In effect, Biden will only be able to enforce some decisions by presidential decree. So Biden will have to rely on cooperation with Republicans and find compromises. “Foreign policy could be an escape ahead,” said German conservative politician David McAllister (CDU), Chairman of the Foreign Affairs Committee in the European Parliament. “This is especially true for Biden’s chosen tougher stance toward China and a geopolitical orientation toward the Indo-Pacific.”
Beijing also sees it that way. “[Biden] will push forward the Indo-Pacific Strategy, solidifying the Indo-Pacific Economic Framework, and thus accelerate competition among major powers in line with the agenda outlined in his national security strategy,” Diao Daming, Professor at the School of International Studies at Renmin University in Beijing, said in the state-run Global Times.
A focus on foreign policy in Washington if domestic agendas are blocked in Congress and the Senate would not be a new strategy: After Republicans took control of the House of Representatives and essentially blocked then-President Bill Clinton’s domestic agenda, he focused on national security issues. In 1996, Clinton and then-Japanese Prime Minister Ryutaro Hashimoto issued a joint statement strengthening the US-Japan alliance for the first time in response to regional tensions such as North Korea and Taiwan.
While the path for the Indo-Pacific after the midterms is still difficult to predict, the signs for the future of US-China relations are clearly set for confrontation. Public opinion of China in the United States has deteriorated massively in recent years, especially since the 2020 Covid outbreak, and new data from the Pew Research Center claims that 82 percent of Americans have a negative view of China this year, an all-time high. Five years ago, that number was 47 percent.
Polls show that these negative opinions are shared by both Democrats and Republicans. China’s aspirations on the world stage have been mentioned by candidates on both political spectrums. In Pennsylvania, Senator-elect John Fetterman (Democrat) said he would “not let China outstrip us.” In Missouri, Senator-elect Eric Schmitt (Republican) called China a growing military, economic, and public “health threat.”
The security strategy of the Biden administration presented in October identified its most dangerous rival: China (China.Table reported). The document states unequivocally: “The People’s Republic of China is the only country with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military, and technological power to do it.” Change through trade, long thought possible, especially in Germany and Europe, is clearly rejected in Washington’s strategy: “Markets alone cannot respond to the rapid pace of technological change, global supply disruptions, non-market abuses by the PRC and other actors.”
A confrontational approach between Washington and Beijing could also lead to tensions with US allies, particularly in Europe, according to Barkin. “EU capitals are far more risk-averse than the US when it comes to deterrence and are likely to view any ramping up of US arms sales and military coordination with Taiwan as overly provocative.”
It will also be interesting to see who will run for the Republican presidency in 2024. According to US media, Trump is expected to announce his candidacy next week. His biggest rival: Florida’s re-elected governor and Republican hardliner Ron DeSantis. The latter presented a package of legislative proposals in September to combat “malign foreign influence,” primarily China’s. That the new US president could be DeSantis is not far-fetched. In Florida, at least, there was a “red wave” that flushed DeSantis to the governorship again by a clear margin.
China highlights a long-debated question about economic development: Can a top-down autocracy outperform liberal market economies in terms of innovation and growth?
Between 1980 and 2019, China’s average annual GDP growth rate was over 8% – faster than any Western economy – and in the 2000s, its economic trajectory exceeded mere catch-up growth (using Western technologies). China started making its own technology investments, producing patents and academic publications and spawning innovative companies such as Alibaba, Tencent, Baidu, and Huawei.
Some naysayers had thought this unlikely. While plenty of autocrats had presided over rapid economic expansions, never before had a non-democratic regime generated sustained, innovation-based growth. Some Westerners were mesmerized by Soviet scientific prowess in the 1950s and 1960s, but often they were channeling their own biases. By the 1970s, the Soviet Union was clearly falling behind and stagnating, owing to its inability to innovate across a broad range of sectors.
True, some astute China observers pointed out that the Communist Party of China’s iron grip did not bode well for the country’s prospects. But the more common view was that China would sustain its astonishing growth. While there were debates over whether China would be a benign or malign force globally, there was little disagreement that its growth was unstoppable. The International Monetary Fund and the World Bank made a habit of projecting past Chinese growth rates into the future, and books with titles like When China Rules the World proliferated.
For years, one also heard arguments that China had achieved “accountability without democracy,” or that the CPC leadership was at least constrained by term limits, a balance of powers, and other good-governance stopgaps. China won praise for demonstrating the virtue of government planning and offering an alternative to the neoliberal Washington Consensus. Even those who recognized China’s model as a form of “state capitalism” – with all the contradictions that entails – projected that its growth would continue largely unabated.
Perhaps the most potent argument was that China would control the world by dint of its ability to achieve global dominance in artificial intelligence. With access to so much data from its massive population, with fewer ethical and privacy restrictions than those faced by researchers in the West, and with so much state investment in AI, China was said to have an obvious advantage in this domain.
But this argument was always suspect. One cannot simply assume that advances in AI will be the main source of economic advantage in the future; that the Chinese government will allow for ongoing high-quality research in the sector; or that Western companies are significantly hampered by privacy and other data regulations.
China’s prospects today look far less rosy than they once did. Having already eliminated many internal checks, President Xi Jinping used the CPC’s 20th National Congress to secure an unprecedented third term (with no future term limits in sight), and stacked the all-powerful Politburo Standing Committee with loyal supporters.
This consolidation of power comes despite major unforced errors by Xi that are dragging down the economy and sapping China’s innovative potential. Xi’s “zero-COVID” policy was largely avoidable and has come at significant cost, as has his support for Russia’s war in Ukraine. Even more and greater blunders are likely to follow now that Xi wields unchecked power and is surrounded by yes-men who will avoid telling him what he needs to hear.
But it would be a mistake to conclude that China’s growth model is crumbling just because the wrong person ascended the throne. The turn toward a harder line of control that started during Xi’s first term (after 2012) may have been inevitable.
China’s rapid industrial growth in the 1990s and 2000s was built on huge investments, technology transfers from the West, production for export, and financial and wage repression. But such export-led growth can go only so far. As Xi’s predecessor, Hu Jintao, recognized in 2012, China’s growth would have to become “much more balanced, coordinated, and sustainable,” with far less reliance on external demand and much greater reliance on domestic consumption.
At the time, many experts believed that Xi would respond to the challenge with an “ambitious reform agenda” to introduce more market-based incentives. But these interpretations overlooked a key question that China’s regime was already grappling with: how to maintain the CPC’s political monopoly in the face of a rapidly expanding, economically empowered middle-class. The most obvious answer – and perhaps the only answer – was greater repression and censorship, which is exactly the path Xi took.
For a while, Xi, his entourage, and even many outside experts believed that the economy could still flourish under conditions of tightening central control, censorship, indoctrination, and repression. Again, many looked to AI as an unprecedentedly powerful tool for monitoring and controlling society.
Yet there is mounting evidence to suggest that Xi and advisers misread the situation, and that China is poised to pay a hefty economic price for the regime’s intensifying control. Following sweeping regulatory crackdowns on Alibaba, Tencent, and others in 2021, Chinese companies are increasingly focused on remaining in the political authorities’ good graces, rather than on innovating.
The inefficiencies and other problems created by the politically motivated allocation of credit are also piling up, and state-led innovation is starting to reach its limits. Despite a large increase in government support since 2013, the quality of Chinese academic research is improving only slowly. Even in AI, the government’s top scientific priority, advances are lagging behind the global tech leaders – most of them in the United States.
My own recent research with Jie Zhou of MIT and David Yang of Harvard University shows that the top-down control in Chinese academia is distorting the direction of research, too. Many faculty members are choosing their research areas to curry favor with heads of departments or deans, who have considerable power over their careers. As they shift their priorities, the evidence suggests that the overall quality of research is suffering.
Xi’s tightening grip over science and the economy means that these problems will intensify. And as is true in all autocracies, no independent experts or domestic media will speak up about the train wreck he has set in motion.
Daron Acemoglu, Professor of Economics at MIT, is the author (with James A. Robinson) of Why Nations Fail: The Origins of Power, Prosperity and Poverty (Profile, 2019) and The Narrow Corridor: States, Societies, and the Fate of Liberty (Penguin, 2020).
Copyright: Project Syndicate, 2022.
www.project-syndicate.org
In China, children spend too much time in front of screens, too, which means that lack of exercise is a big issue for them. Why not rely on tried-and-tested methods? More and more parents are sending their children to traditional kung fu and taichi schools during vacations so that they can exercise.
The auto show in Beijing is canceled. The reason: Covid. A look at the new infection numbers in the city leaves heads shaking, which has become something of a habit. There were 95 new cases on Wednesday. Incomprehension is followed by speculation – are there any signs that zero-Covid will soon be abandoned? Hopes for this have now been unmistakenly rejected by the Politburo Standing Committee in its first meeting after the National Congress.
At least Xi Jinping’s side is in favor of minimizing the damage to the economy. This will do little to reassure the people of Guangzhou, a city with over 2,000 new infections, who fear a lockdown as severe as the one in Shanghai in the spring. Nevertheless, our author team in China offers a bit of hope.
How will the US shape its future China policy? Regardless of the distribution in the Senate and the House of Representatives after the midterm elections, the US will continue to tighten its stance toward China. Democrats and Republicans are united in one thing: their negative view of China. Amelie Richter’s analysis discusses what can be expected if the Republicans take control of the House of Representatives and looks at what effects it also has on Europe.
How the path should be set for Germany’s relations with China was also the topic of a Parliamentary session in the Bundestag. According to the governing parties, the China strategy of the German government is to see the light of day this year – previously, it was scheduled for next spring. Read more about this in our News section.
Not long ago, many believed China’s growth to be unstoppable. Xi’s Covid policy proved the optimists wrong. After all, his primacy of ideology inflicted severe damage to China’s economy in recent months. In today’s Opinion, MIT Professor Daron Acemoglu talks about the fundamental problems of economics in an autocracy.
Hopes that China would soon announce a relaxation of its Covid measures were met with a stern rejection yesterday. “We must not relax the necessary epidemic prevention initiatives,” the newly formed Politburo Standing Committee said in its first meeting after the Party Congress. The approach is to be “steadfastly supported.”
Covid numbers have reached their highest level in recent days since the Shanghai lockdown in March and April. But the government does not want to admit defeat to the virus. The situation is becoming increasingly confusing. Authorities now try to avoid sending entire cities into lockdowns. Instead, there is a patchwork of districts or streets throughout the country, that are in lockdown.
Such compartmentalizations are often declared as “temporary control” or “silence” (China.Table reported). This makes it difficult to see the entire picture, but new outbreaks are reported in all major metropolitan areas. People are stuck in their homes and travel within the country is more difficult than ever, as hardly any cities let in travelers without quarantining them if they come from an area with infections. The capital of Beijing is taking a particularly harsh approach in this regard, as many residents currently report.
Analysts at Goldman Sachs believe that authorities will not be able to keep the situation up for much longer. On Monday, the economists wrote that, while relaxing Covid regulations is still months away, preparations are being made. The government needs to act because the cost of zero-Covid starts to become an unsustainable burden on the economy.
According to a report in the Wall Street Journal, the situation could be eased with a gradual approach. The US newspaper quotes sources close to the government, according to which the hotel quarantine and the subsequent isolation at home upon arrival in China, could be reduced slightly from ten to seven days early next year. Bloomberg and Reuters also quoted sources with similar statements. In addition, there are discussions of a slight reduction in the number of mandatory Covid tests in everyday life as early as this month. Some cities currently require people to be tested every 48 hours. This could be readjusted, according to the Wall Street Journal.
What definitely turned out false, however, was a series of reports last week. For days, rumors of a far-reaching departure from zero-Covid in the near future circulated. The stock markets also reacted to this. The realization of how unrealistic a rapid opening is, only set in after some delay. The population is hardly immune to Sars-CoV-2, and zero-Covid is state doctrine. A change of course requires both medical and propaganda preparation.
According to reports, preparations for a large-scale vaccination campaign that is apparently aimed at finally closing the vaccination gap among particularly elderly people are also underway. The goal is said to vaccinate 95 percent of all people over 60 at least twice. According to the latest available figures, 86 percent of the elderly are vaccinated twice, and access to effective Covid drugs is also on the agenda.
Another interesting finding of the report is that Beijing apparently hopes for help from the World Health Organization to sell a possible relaxation of Covid measures to its people. Since the early days of the pandemic, the WHO has classified the virus as a “global health emergency.” But if the WHO reconsiders that classification at its next meeting in January, Beijing could also reduce its own risk assessment of the virus for publicity reasons. The government, as the Wall Street Journal reports, would then consider classifying Covid only as a Class B infectious disease, rather than a Class A infection.
It seems clear that Beijing is playing out scenarios behind the scenes as to what a possible opening might look like. But hardly anything seems set. According to sources in the Wall Street Journal, it could take another year before life in China returns to a similar state as before the pandemic. To other observers, even this forecast seems far too optimistic. Joern Petring
The “red wave” failed to materialize for the time being – in the US midterm elections, the Republicans did not achieve the strong results polls had suggested in the run-up. In many states, the count is still ongoing; in the House of Representatives, it looks like a victory for the Grand Old Party (GOP). How the Senate seats will be distributed in the future is still open. Georgia still has a runoff election in early December.
What is clear, however, is this: US-China relations are moving toward more confrontation – no matter how the Senate and House of Representatives are distributed. Even though Congress is currently more polarized than it has been in decades, Republicans and Democrats are remarkably united on the China issue: both favor a tougher stance.
Other foreign policy topics, however, are less clear. The election campaign in the USA was dominated by domestic issues: Inflation, national security, abortion and gun rights were the defining issues for voters in their decision at the ballot. US foreign policy for Asia played no role. So what does a vote in Arizona have to do with life in Manila, more than 12,000 miles away? Potentially a lot, because the results of the US midterms may also have far-reaching implications in the Indo-Pacific region, where the US and China are competing for influence.
The outcome of the midterms can steer US foreign policy in the region in two different directions – decreasing or increasing focus. On the one hand, a Republican-controlled US House of Representatives after the midterms could mean less US involvement on international issues. Increased “isolationism,” like under former President Donald Trump, is not unlikely, says Asia analyst Joshua Kurlantzick of the US think tank Council on Foreign Relations (CFR). Trump still holds strong support in the GOP. The ex-president “is suspicious of US relations with many Asian partners whom he believes do not contribute enough to their own defense,” Kurlantzick wrote in a column in the Japan Times.
A Republican House of Representatives could reasses Washington’s current involvement in Asia, the analyst believed. This would include its relationship with South Korea, Japan, and other allies. The Republican victory could also affect US defense spending and military agreements and put pressure on the Biden administration to “reaffirm its position on Taiwan,” Kurlantzick said. A growing number in the GOP do not want to intervene in the event of a Taiwan invasion. US President Joe Biden pledged support to Taipei in the event of an attack several times this year. Washington’s Taiwan stance could become a significant point of conflict over the next two years.
A Republican majority in the House of Representatives could lead to a more confrontational approach to the Taiwan issue, says foreign policy expert Noah Barkin of the Berlin office of the German Marshall Fund (GMF). A“red wave” could also spark new China-related legislation in a Republican-led Congress. These have the potential to increase tensions between Washington and Beijing, Barkin said.
Trade policy and Taiwan are also expected to be on the agenda for the expected meeting between Xi and Biden on the sidelines of the G20 summit in Bali next Monday. It will be the first face-to-face meeting between the two leaders since Biden took office as President. The White House confirmed the meeting on Thursday. Biden said at a press conference on Wednesday that he will have much to discuss with Xi. High-ranking US circles said the Ukraine war would also be a topic. However, neither a joint declaration nor specific agreements can be expected. Rather, Biden wants to create a basis for joint relations.
However, a GOP-led Congress – and possibly Senate – could also shift the Biden administration’s focus toward foreign policy issues if significant steps in domestic policy are off the table. In effect, Biden will only be able to enforce some decisions by presidential decree. So Biden will have to rely on cooperation with Republicans and find compromises. “Foreign policy could be an escape ahead,” said German conservative politician David McAllister (CDU), Chairman of the Foreign Affairs Committee in the European Parliament. “This is especially true for Biden’s chosen tougher stance toward China and a geopolitical orientation toward the Indo-Pacific.”
Beijing also sees it that way. “[Biden] will push forward the Indo-Pacific Strategy, solidifying the Indo-Pacific Economic Framework, and thus accelerate competition among major powers in line with the agenda outlined in his national security strategy,” Diao Daming, Professor at the School of International Studies at Renmin University in Beijing, said in the state-run Global Times.
A focus on foreign policy in Washington if domestic agendas are blocked in Congress and the Senate would not be a new strategy: After Republicans took control of the House of Representatives and essentially blocked then-President Bill Clinton’s domestic agenda, he focused on national security issues. In 1996, Clinton and then-Japanese Prime Minister Ryutaro Hashimoto issued a joint statement strengthening the US-Japan alliance for the first time in response to regional tensions such as North Korea and Taiwan.
While the path for the Indo-Pacific after the midterms is still difficult to predict, the signs for the future of US-China relations are clearly set for confrontation. Public opinion of China in the United States has deteriorated massively in recent years, especially since the 2020 Covid outbreak, and new data from the Pew Research Center claims that 82 percent of Americans have a negative view of China this year, an all-time high. Five years ago, that number was 47 percent.
Polls show that these negative opinions are shared by both Democrats and Republicans. China’s aspirations on the world stage have been mentioned by candidates on both political spectrums. In Pennsylvania, Senator-elect John Fetterman (Democrat) said he would “not let China outstrip us.” In Missouri, Senator-elect Eric Schmitt (Republican) called China a growing military, economic, and public “health threat.”
The security strategy of the Biden administration presented in October identified its most dangerous rival: China (China.Table reported). The document states unequivocally: “The People’s Republic of China is the only country with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military, and technological power to do it.” Change through trade, long thought possible, especially in Germany and Europe, is clearly rejected in Washington’s strategy: “Markets alone cannot respond to the rapid pace of technological change, global supply disruptions, non-market abuses by the PRC and other actors.”
A confrontational approach between Washington and Beijing could also lead to tensions with US allies, particularly in Europe, according to Barkin. “EU capitals are far more risk-averse than the US when it comes to deterrence and are likely to view any ramping up of US arms sales and military coordination with Taiwan as overly provocative.”
It will also be interesting to see who will run for the Republican presidency in 2024. According to US media, Trump is expected to announce his candidacy next week. His biggest rival: Florida’s re-elected governor and Republican hardliner Ron DeSantis. The latter presented a package of legislative proposals in September to combat “malign foreign influence,” primarily China’s. That the new US president could be DeSantis is not far-fetched. In Florida, at least, there was a “red wave” that flushed DeSantis to the governorship again by a clear margin.
China highlights a long-debated question about economic development: Can a top-down autocracy outperform liberal market economies in terms of innovation and growth?
Between 1980 and 2019, China’s average annual GDP growth rate was over 8% – faster than any Western economy – and in the 2000s, its economic trajectory exceeded mere catch-up growth (using Western technologies). China started making its own technology investments, producing patents and academic publications and spawning innovative companies such as Alibaba, Tencent, Baidu, and Huawei.
Some naysayers had thought this unlikely. While plenty of autocrats had presided over rapid economic expansions, never before had a non-democratic regime generated sustained, innovation-based growth. Some Westerners were mesmerized by Soviet scientific prowess in the 1950s and 1960s, but often they were channeling their own biases. By the 1970s, the Soviet Union was clearly falling behind and stagnating, owing to its inability to innovate across a broad range of sectors.
True, some astute China observers pointed out that the Communist Party of China’s iron grip did not bode well for the country’s prospects. But the more common view was that China would sustain its astonishing growth. While there were debates over whether China would be a benign or malign force globally, there was little disagreement that its growth was unstoppable. The International Monetary Fund and the World Bank made a habit of projecting past Chinese growth rates into the future, and books with titles like When China Rules the World proliferated.
For years, one also heard arguments that China had achieved “accountability without democracy,” or that the CPC leadership was at least constrained by term limits, a balance of powers, and other good-governance stopgaps. China won praise for demonstrating the virtue of government planning and offering an alternative to the neoliberal Washington Consensus. Even those who recognized China’s model as a form of “state capitalism” – with all the contradictions that entails – projected that its growth would continue largely unabated.
Perhaps the most potent argument was that China would control the world by dint of its ability to achieve global dominance in artificial intelligence. With access to so much data from its massive population, with fewer ethical and privacy restrictions than those faced by researchers in the West, and with so much state investment in AI, China was said to have an obvious advantage in this domain.
But this argument was always suspect. One cannot simply assume that advances in AI will be the main source of economic advantage in the future; that the Chinese government will allow for ongoing high-quality research in the sector; or that Western companies are significantly hampered by privacy and other data regulations.
China’s prospects today look far less rosy than they once did. Having already eliminated many internal checks, President Xi Jinping used the CPC’s 20th National Congress to secure an unprecedented third term (with no future term limits in sight), and stacked the all-powerful Politburo Standing Committee with loyal supporters.
This consolidation of power comes despite major unforced errors by Xi that are dragging down the economy and sapping China’s innovative potential. Xi’s “zero-COVID” policy was largely avoidable and has come at significant cost, as has his support for Russia’s war in Ukraine. Even more and greater blunders are likely to follow now that Xi wields unchecked power and is surrounded by yes-men who will avoid telling him what he needs to hear.
But it would be a mistake to conclude that China’s growth model is crumbling just because the wrong person ascended the throne. The turn toward a harder line of control that started during Xi’s first term (after 2012) may have been inevitable.
China’s rapid industrial growth in the 1990s and 2000s was built on huge investments, technology transfers from the West, production for export, and financial and wage repression. But such export-led growth can go only so far. As Xi’s predecessor, Hu Jintao, recognized in 2012, China’s growth would have to become “much more balanced, coordinated, and sustainable,” with far less reliance on external demand and much greater reliance on domestic consumption.
At the time, many experts believed that Xi would respond to the challenge with an “ambitious reform agenda” to introduce more market-based incentives. But these interpretations overlooked a key question that China’s regime was already grappling with: how to maintain the CPC’s political monopoly in the face of a rapidly expanding, economically empowered middle-class. The most obvious answer – and perhaps the only answer – was greater repression and censorship, which is exactly the path Xi took.
For a while, Xi, his entourage, and even many outside experts believed that the economy could still flourish under conditions of tightening central control, censorship, indoctrination, and repression. Again, many looked to AI as an unprecedentedly powerful tool for monitoring and controlling society.
Yet there is mounting evidence to suggest that Xi and advisers misread the situation, and that China is poised to pay a hefty economic price for the regime’s intensifying control. Following sweeping regulatory crackdowns on Alibaba, Tencent, and others in 2021, Chinese companies are increasingly focused on remaining in the political authorities’ good graces, rather than on innovating.
The inefficiencies and other problems created by the politically motivated allocation of credit are also piling up, and state-led innovation is starting to reach its limits. Despite a large increase in government support since 2013, the quality of Chinese academic research is improving only slowly. Even in AI, the government’s top scientific priority, advances are lagging behind the global tech leaders – most of them in the United States.
My own recent research with Jie Zhou of MIT and David Yang of Harvard University shows that the top-down control in Chinese academia is distorting the direction of research, too. Many faculty members are choosing their research areas to curry favor with heads of departments or deans, who have considerable power over their careers. As they shift their priorities, the evidence suggests that the overall quality of research is suffering.
Xi’s tightening grip over science and the economy means that these problems will intensify. And as is true in all autocracies, no independent experts or domestic media will speak up about the train wreck he has set in motion.
Daron Acemoglu, Professor of Economics at MIT, is the author (with James A. Robinson) of Why Nations Fail: The Origins of Power, Prosperity and Poverty (Profile, 2019) and The Narrow Corridor: States, Societies, and the Fate of Liberty (Penguin, 2020).
Copyright: Project Syndicate, 2022.
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In China, children spend too much time in front of screens, too, which means that lack of exercise is a big issue for them. Why not rely on tried-and-tested methods? More and more parents are sending their children to traditional kung fu and taichi schools during vacations so that they can exercise.