By Eric Vandenbroeck and co-workers
As relations between the United States and China have
spiraled down to a half-century low, a frightening new narrative has taken
hold among some U.S. analysts and policymakers. It supposes that China’s window
of opportunity to “reunify” Taiwan with the mainland—one of Chinese President
Xi Jinping’s core foreign policy objectives—is closing rapidly, intensifying
the pressure on Beijing to act swiftly and forcefully
while it still has the chance.
This narrative rests on the belief that China’s
rise is nearing its end. Unprecedented demographic decline, a heavy debt
burden, uneven innovation, and other severe economic problems have slowed
China’s growth and are likely to slow it even further,
leaving the country without the military power or political influence to
challenge the United States. Beijing is aware of these headwinds, the thinking goes,
and is therefore likely to act soon before it is too late. As the scholars, Hal
Brands and Michael Beckley have argued, “China is tracing an arc that often
ends in tragedy: a dizzying rise followed by the specter of a hard fall.” They
believe it is now or never if China wants to redraw the
world map.
But such analysis is misguided. True, China’s economic ascent has
slowed and will eventually reverse, impeding Beijing’s military and political
aspirations. But a “hard fall” is not in the cards. Any decline from China’s
economic peak is likely to be gradual—possibly eased by heavy spending on
research and development explicitly aimed at partially offsetting the country’s
demographic and debt-related woes. Current income and defense spending
trajectories suggest China will have more resources to compete militarily with
the United States over the next ten years than it has had over the last 20. As
a result, Beijing will become more—not
less—capable of projecting power, while the United States will have difficulty
countering Chinese military challenges in Asia. Far from a narrow window to
achieve their geopolitical ambitions, China’s leaders have space to bide their
time.
Demography, not destiny
---Demographic decline all but guarantees China’s eventual economic
decline. But this process will likely be gradual, not sudden, and the timing
remains uncertain. China’s labor force is probably shrinking and will continue
to shrink indefinitely because the population is about to shrink if t has not begun to do so already. In 2021, Chinese birth rates fell to a recorshrinkan
age in China is about half a year older than in the United States, and by 2042
it will be almost seven years older, or on a par with Japan today. According to
one UN projection, China’s population will decline more quickly later this
century, falling by more than 200 million people by 2060. As this decline unfolds,
real economic growth will be essentially impossible.
But even amid its demographic contraction, China
will be at worst the world’s third-largest national economy, as it was in the
first decade of this century, but with wealth and technological abilities
closer to those of the United States. More likely, China will be the
second-largest economy in the world. A peaking population will not necessarily
translate into a rapid economic decline for the rest of this decade and the
next. The dwindling of China’s labor force has probably already been underway
for a decade, but its economic growth has still outpaced that of the United
States. No one believes that China’s economic capabilities peaked in 2012 or,
for that matter, in 2018. While labor force decline will eventually be a
significant problem for China, it is unclear when that will be. China’s median
age in 2032 is projected to be the same as the United States in 2052. If
demography is destiny, the United States will have declined sharply by then.
But in reality, the United States’ economic health, like China’s, depends on
many other factors.
One of those factors is debt. Debt already weighs on Chinese growth,
but the problem is chronic, not acute. Total Chinese credit to the nonfinancial
sector has increased substantially over the last decade, mainly in response to
the 2008–9 global financial crisis. As of the end of 2019, this measure of
outstanding debt stood at 263 percent of GDP, slightly higher than the U.S.
share of 255 percent. China has been more prudent during the COVID-19 pandemic. Still, its
debt burden could swell even more extensive as its population ages, and it must
care for a more significant number of retirees. Still, the weight of China’s
debt will steadily limit growth, not causing a steep fall. As a result, China will
have plenty of money on hand for military and related investments. According to
the World Bank, China spent $6.2 trillion on infrastructure, land, and
machinery in 2019—$1.6 trillion more than the United States spent. U.S. capital
is more productive than Chinese capital. Still, there is little doubt that even
with its high debt burden China will have considerable resources at its
disposal long into the future.
Another factor that will shape China’s economic trajectory is
innovation. As ever, the Chinese Communist Party’s need for control will limit
the pace of innovation. On that score, Xi’s regime has not performed well. It
has attacked
private technology firms and generally discouraged competition. But Beijing can afford to
spend heavily on new technologies that will give it a moderate and enduring economic
boost. According to the Organization for Economic Cooperation and Development,
China spent roughly $515 billion on research and development in 2019, while the
United States spent $633 billion. China’s R&D spending will likely rise for
the rest of the decade, even as its economy slows. Beijing will also continue
to coerce technology transfer from private companies doing business in China or
steal it outright. With its current economic system, China cannot become a
leading innovator. Still, it has already caught up to the rest of the world in
key fields such as 5G telecommunications and energy storage. Maintaining
technological parity with the United States in at least some critical areas
over the next two decades will be easier than closing the last technological
gap.
More with less
Military trends are similarly favorable to China over the next decade.
That is partly because flagging economic prospects will take time tefense and partly because China has proven able to compete
with fewer resources overall. China’s military
spending as a percentage of GDP has decreased since 2010, and the country
has never spent more than 1.9 percent of GDP on national defense. (The United
States spent 3.7 percent of GDP on defense in 2020.) China’s military spending
has been a third of the United States’ for the last three decades. And yeused on acquiring asymmetric capabilities and limited its
milita for the last three decades ambitions to Asia,
it has built a military that can now defeat the United States in a conflict
over Taiwan.
And the future is bright for the People’s Liberation Army. Although
some of its modernization efforts remain unfinished, the PLA has
made significant progress toward professionalizing its noncommissioned
officer corps and hiring capable civilians to fulfill vital support roles. It
is also recruiting more and more college graduates, improving its ability to
conduct complex joint operations in a high-tech, information environment.
Over the next ten years, China’s ability to project power throughout
Asia will grow. By 2030, it will have four aircraft carriers, a
network, and space infrastructure that enhances the connectivity and thus the
lethality of its forces, ground- and space-based weaponry capable of
threatening U.S. military and civilian satellite constellations, and an air
force that can challenge U.S. air superiority in Asia. It will have more naval
ships than the United States and a nuclear arsenal that is larger, more
survivable, and better able to threaten targets around the globe, thanks to
Chinese advancements in hypersonics. Any remnants of
U.S. military superiority in Asia, such as Washington’s better submarine
capabilities, are disappearing. China has invested heavily in developing
so-called antisubmarine warfare capabilities, including advanced
helicopters and ship-based
sonar systems that will be ready for action in the next ten
years.
Of course, the U.S. military will not stand still as the PLA advances.
The United States is building resilient
space infrastructure and capabilities. It plans to deploy
intermediate-range ballistic missiles to the Indo-Pacific now that the
Intermediate-Range Nuclear Forces Treaty no longer binds Washington. And it
plans to add the Intermediate-Range Nuclear Forces Treaty no longer binds Washingtonina. Headlining these efforts is the Pacific
Deterrence Initiative, a Pentagon plan to enhance U.S. competitiveness in the
Indo-Pacific. In this its inaugural year, the PDI includes approximately $6
billion for new integrated command-and-control systems, drone capabilities,
electronic warfare, F-35 fighters, ships to counter Chinese low-level aggression
and provocation, and support systems and equipment for U.S. Marines and other
ground forces.
But even with these investments, U.S. forces in the Indo-Pacific will
have vulnerabilities China can exploit for asymmetric advantage. For instance,
the United States cannot defend its forward bases from Chinese missile attacks
or its space assets from Chinese counter-space operations. Current procurement
and acquisition plans reveal that the United States will not have significantly
more forces to deploy to the region in ten years thanhe
U.S. Navy is modernizing, but it will not have its planned fleet of between
450in ten years and 500 ships until 2045—a fleet size that China will have in
just ten years.
All of this suggests that China has not yet reached its position of
maximal military advantage vis-à-vis the United States. It is telling that
although Western scholars such as Brands and Beckley suggest that a relatively
stagnant economy should influence Chinese leaders’ strategic calculus,
encouraging them to act now or lose their chance, there is no evidence of this
line of thinking in Chinese political or military writings, according to
textual analyses carried out by natural language processing and analytics
tools. Indeed, most Chinese strategists are sanguine about China’s future.
As former Chinese diplomat Zhen Bingxi wrote in a journal
published by the People’s
Daily Press, China
is “well on its way to becoming a global superpower,” even if it will continue
to lag behind the United States in certain areas. Some Chinese media
commentators have explicitly pushed back against American rhetoric about “peak
China,” noting that the country “has
long defied the pessimistic predictions of American media outlets and
academia,” as one journalist put it in a pro-Beijing Hong Kong media outlet.
Some might dismiss these comments as predictable attempts to rebut a
narrative of Chinese decline. But no authoritative Chinese military writings
consider the argument that China needs to take Taiwan
now because the window of opportunity is closing, even though Chinese security
commentators regularly debate other sensitive topics such as the effectiveness
of China’s efforts at peaceful unification with Taiwan. Such writings suggest
that Chinese leaders increasingly believe they could take Taiwan by force and
that peaceful unification is not working. Xi’s rhetoric, moreover, indicates
that he may want to achieve unification to seal his legacy. Once he is
confident that the PLA is ready, he may move swiftly to take Taiwan—not because
he will not have another chance but because the future is always uncertain.
If this is Xi’s thinking, he is
right. Even if its growth stagnates over the next decade, China will likely be
the world’s second-largest economy. Any austerity measures instituted then
would take many years to reach the military. And one thing is certain: China
will be more capable militarily in 2035 than it is today.
Confident China, capable
China
An anxious China at the peak of its power and a confident China still
on the military ascent can be expected to act in similar ways. Both will be
more aggressive, especially regarding territorial issues such as Taiwan. But these different
motivations for Chinese aggression suggest different strategic responses from
the United States: a peaking China will be the most dangerous over the next
decade, whereas a still ascendant one will be a threat for much longer.
The United States should be wary of
short-term solutions that undermine its ability to compete in the long term and
prepare equally for war in 2027 and 2037.
There is a silver lining, however. A peaking power may fight to the
death since it has only one chance to remake the international order. But a power
that knows it will have more opportunities to get its way may be more willing
to back down from a military confrontation that does not go as planned. For
example, suppose Xi made a move for Taiwan and met resistance. In that
case, he could still claim victory, perhaps after seizing an offshore
island or declaring that he has taught a lesson to “separatists” in Taiwan and
“imperialists” in the United States. A confident power is also less likely to
be provoked into starting a war. Although it conducted large-scale military
exercises near Taiwan after U.S. Speaker of the House Nancy Pelosi visited the
island this month, China refrained from more aggressive actions—intercepting
Pelosi’s aircraft, for instance—that might have risked igniting a conflict. That
may be because the best war for a confident China is when the PLA moves quickly against Taiwan and gives little
warning to the United States.
For years to come, the United States is more likely to face a
confident, capable China than an insecure, reckless one. Washington will not
emerge victorious from this contest because Beijing will step out of the race,
as Moscow did at the end of the Cold War. To secure its interests in Asia, the
United States must prepare for a war with China,
whether tomorrow or two decades do.
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