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  • Writer's pictureThe San Juan Daily Star

China’s decline became undeniable this week. Now what?


For years, I’ve been writing columns predicting China’s decline. This week, the decline became undeniable. The road downhill will not be smooth — not for it or for us.

The news is that the death rate in China outnumbered the birthrate for the first time in more than 60 years. Last time, it was famine caused by Mao Zedong’s economic policies that led to an estimated 36 million deaths from starvation. Now, it’s young Chinese couples who, like their peers in much of the developed world, don’t want children.

So far, the demographic downshift has been small — 9.56 million births last year against 10.41 million deaths, according to Chinese government statistics. That’s out of a total population of 1.4 billion. The country will not be running out of people anytime soon.

But the longer trend lines look awful for Beijing. In 1978, when Deng Xiaoping’s economic reforms got underway, China’s median age was 20.1 years. In 2021, it was 37.9, exceeding that of the United States. China’s fertility rate is 1.18. The replacement rate necessary to maintain a stable population is 2.1. As of 2018, there were an estimated 34 million more males in China than females — the result of a one-child policy that led couples to abort girls at a higher rate than boys. China’s working-age population has been shrinking for years; a government spokesperson estimated that it will fall to 700 million by the middle of the century.

If you think the world has too many people already, then all this might sound like good news. It’s not. China is increasingly likely to grow old before it gets rich, consigning hundreds of millions of Chinese to a penurious and often lonely old age. A declining population generally correlates with economic decline — roughly a 1-percentage-point decline in economic growth for every percentage-point decline in population, according to Ruchir Sharma, a former head of emerging markets at Morgan Stanley. And China, both as an export hub and as a vast market, has been a major driver of global economic growth for four decades. Its weakness will ripple through the world economy.

But the scariest aspect of China’s decline is geopolitical. When democracies experience economic problems, they tend to become inward looking and risk averse. When dictatorships do, they often become externally focused and risk inclined. Regimes that can’t, or won’t, address domestic discontents through political and economic reforms often try to do so through foreign adventures.

That’s a point worth thinking about now that Beijing is also reporting the slowest rate of economic growth in nearly four decades. The immediate cause here is Xi Jinping’s catastrophic mishandling of the COVID crisis — the punitive lockdowns, the rejection of foreign vaccines, the abrupt end of restrictions, the constant lying.

But China’s economy was already in trouble before the pandemic: a real estate bubble at the point of bursting, record high capital flight, the end of Hong Kong as a relatively free city, and Chinese companies like Huawei increasingly unwelcome in Western countries on account of espionage and intellectual-property-theft concerns.

A pragmatic government might have been able to tackle these challenges. But Xi has appointed a gang of yes men to the Politburo for his unprecedented third term as supreme leader. If — or as — economic conditions deteriorate, they are likelier to find answers to their problems in aggression rather than reform. Think of inflationary Argentina on the eve of the invasion of the Falklands or bankrupt Iraq just before the invasion of Kuwait.

What should the United States do? Three things.

First, deterrence. The better Kyiv does militarily against Moscow, the more deeply the lesson will be learned in Beijing that taking Taipei wouldn’t be as easy as it seems. The sooner Taiwan acquires large stores of easy-to-use, hard-to-target weapons such as Stinger and Javelin missiles, the more hesitant China’s military planners will be to step on a sea urchin. The more the United States does to help Japan, Australia and other allies strengthen their militaries, the greater the deterrent effect it will have on China’s regional ambitions.

The administration is doing much of this already. It needs to do more of it, much faster.

Second, trade detente. Trying to punish Beijing via Donald Trump’s tariffs aggravates the relationship while harming both sides economically. We should offer to roll them back in exchange for guarantees from China that it will end its hacking campaigns against U.S. institutions.

If it cheats, the tariffs can be reimposed and doubled.

Finally, human rights. At every opportunity, the State Department should speak up loudly for China’s dissidents. Jimmy Lai and Qin Yongmin, among others, should be as familiar to Americans as Andrei Sakharov and Natan Sharansky were in the 1970s. Their names should be raised at every bilateral meeting with Chinese officials not only out of concern for their lives but also as reminders that our fundamental differences with Beijing aren’t strategic. They’re moral.

In the long run, the greatest hope we can have for China is its people. The greatest investment we can make in the coming decades of turbulence is to keep faith with them.

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