[Column] Will Xi’s impatience work?

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[Column] Will Xi’s impatience work?

Yoon Young-kwan
The author, a former foreign minister, is an emeritus professor at Seoul National University.

Power is the engine for international politics just like money is for economy. Throughout history, war and peace were also the offshoots of the dynamic interaction between the growth and decline of power of each country. Many experts predict U.S.-China relations will be in peril until the end of the 2020s. If so, which will be more dangerous — a more powerful China or a declining China? Many think the first will pose a bigger challenge to the world than the second. Really?

The theory goes that if China becomes powerful enough to outpace the United States, tensions will intensify and reach the moment of an eventual clash. But opponents don’t think so. They believe that a China at the peak of power and on a downward path from now is more dangerous. Those experts raised the possibility of Chinese President Xi Jinping rushing to take an adventurous action — such as the unification of Taiwan, as he proclaimed while China achieved remarkable economic growth — before it is too late. Such a tendency is commonly found among authoritarian leaders, contend Hal Brands and Michael Beckley, co-authors of insightful book “Danger Zone: The Coming Conflict with China.”

But a tirelessly ascending China now faces serious obstacles, internal and external, to its relentless crusade against America. In other words, China’s fundamentals — the very foundation of the Chinese dream Xi pushes to realize — are weakening noticeably.

First of all, Beijing on January 10 announced a reduction in the Chinese population in 2022, the first since the massive starvation of people to death during the Great Leap Forward. China’s population is expected to decline by 5 to 10 million each year for quite a long time while its older population increases at that pace. That means China becomes a country of senior citizens before it becomes rich. To maintain the status quo, China needs a birthrate of 2.1, but the figure is 1.18 today (Korea’s number is a more pitiful 0.81). Despite Beijing’s lifting of birth limit to three children per couple and generous subsidies, the Chinese are not willing to have children. A reduction in population inevitably lowers China’s economic growth. To make up for the loss in population, training for the workforce and innovation of industry are needed. But if the government invests in improving the system, it must cut back on spending on military reinforcements for further expansion overseas.

Second, China’s economy has entered a low growth phase. This year’s growth rate will be higher than last year’s 3 percent, but it can hardly expect a five to six percent growth from now due to China’s serious structural problems. After exports decreased in the wake of the 2008 global financial crisis, China’s central and local governments briskly invested in developing infrastructure by issuing debts and created jobs. But because of the snowballing debt, China’s debt-to-GDP ratio soared up to 286 percent in 2021 from 140 percent in 2008. Overinvestment at the time led to unceasing defaults of real estate developers. Apartment vacancies in China reportedly could accommodate the entire population of France.

Third, international environments China faces are arguably the worst. As a number of foreign companies increasingly flee China, it prompts unprecedented capital flight. On top of that, the U.S. is encircling China with its allies, as manifested by the Aukus, QUAD, IPEF, the Chip 4 and the strengthening of the Indo-Pacific and the NATO. The U.S. continues building pressure on China by taking advantage of its multi-layered alliances. Such an uphill battle for China will certainly help delay China’s development of cutting-edge technology — semiconductors, for instance — to compete with the U.S. for quite a while.

During his first and second terms, President Xi reversed the three major strategies of Deng Xiaoping to open and reform China. First, Xi concentrated power on himself after dismissing the collective leadership upheld by Deng to avoid the apocalyptic chaos under Mao. Second, Xi abandoned Deng’s advice to get along with the United States and took a path toward confrontation. Third, Xi suppressed market activities through the Communist Party and its ideology instead of respecting market principles, the core of Deng’s opening and reform.

But unfortunately, China’s current challenges can only be addressed when Xi returns to Deng’s strategy. In other words, only when some checks and balances work in the government’s policymaking process, China would not make critical mistakes such as its zero-Covid policy or the invasion of Ukraine by Russian President Vladimir Putin. Only when Xi chooses to reenergize the private sector by minimizing state intervention and the ideology of the Communist Party, China will recover economic vitality. At the same time, Xi must fundamentally improve China’s relations with the United States. Only then can China break out of the American containment, and foreign companies also will return.

Over the past three months, the Chinese government changed its policy tone a bit. Beijing abruptly scrapped its stringent zero-Covid policy and finally showed the smiling face of its boss at a summit with the U.S. after a long while. But what China needs now is not such a tactical response, but a fundamental change of its strategy.

Xi rushed to a standoff with Uncle Sam too fast. Could he return to the path he had abandoned before? Or would he stick with a declining path as an underdog? That is the biggest question for the rest of the world in the 2020s.

Translation by the Korea JoongAng Daily staff.
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