The West shouldn’t celebrate a weaker Chinese economy

The world’s second largest economy is sputtering. China’s official 2023 growth rate is 5.2% (part of which is growth rate) skeptical) is about half of what it was in the decade before the pandemic. Exports and imports fell, and foreign investment in China fell by 8%.as Chatham House In other words, “long-term capital… appears to be voting with its feet.” China’s youth unemployment rate is so high that the government has temporarily stopped publishing the unemployment rate. There are growing concerns that the collapse of the real estate bubble and falling prices, which have long been a concern, could lead to a catastrophic situation. deflation.

But Western countries, especially adversaries, should not rejoice over China’s difficulties. Unlike during the Cold War, when the Soviet Union had little influence on the world economy, China has become a major international economic power, accounting for 18% of global GDP. It is the world’s largest exporter and second largest importer. China’s foreign trade accounts for more than one-third of its GDP, and it is a major trading partner for 120 countries, including the largest economies in Asia, Africa and Latin America. The European Union receives more imports from China than any other country.

China is the source of more than 10% of the world’s foreign direct investment. It also owns about 11 percent of U.S. Treasuries and has a large footprint in more than 150 countries with its expansive Belt and Road Initiative. For both developed and emerging economies, a slowdown in Chinese demand or production, or a severe policy shift, would have a significant impact.

Many factors have created this unstable economy. Overinvestment in industry, slumping consumer spending, and exploding debt, combined with political restrictions, are distorting development. The need for social control, reflected in fertility policies and pandemic lockdowns, is undermining the vitality of national economies. Ideology compounds the difficulties, such as when the need to increase consumer spending collides with reluctance to make an effort. economic stimulus package That could be an advantage for the private sector.

Externally, US tariffs are hurting Export in major areas To China’s largest customer. Washington persuaded the Netherlands and Japan to join. export regulation Both the United States and the European Union are increasing their scrutiny of Chinese investments.Politically, the world environment surrounding China has become decisive. not very friendly This is due to the Chinese government’s response to the coronavirus pandemic, domestic repression, and China’s repeated excuses for Russia’s invasion of Ukraine.

Whatever the cause, China’s downturn is not something the West should hope for. In addition to the ramifications of a severe landslide, an economically challenged regime in Beijing could become even more politically problematic and dangerous.

Authoritarian leaders are not vulnerable to true popular elections or recalls, but ironically, they can be replaced at any time. They have to find a way to keep their core constituencies happy. They need, in the words of political scientist David Easton, “productive support.” Successive Chinese leaders have bought this support by encouraging the growth of a large and wealthy Chinese middle class, providing them with goods, travel and bright prospects for their children in exchange for political compliance. .

But this arrangement requires economic growth and diversification. Slow growth and disappearing prospects, coupled with high youth unemployment, are endangering this tacit agreement.

Such regimes are unable to honor economic agreements and often rely on the currency of nationalism. Society is rewarded by the provision of symbolic goods. “Determination” in the face of external hostility. Claiming sovereignty over neighboring waters. and pledges to restore its territorial integrity (i.e., Taiwan) “by force if necessary.”

Aggressively waving the national flag around the world to compensate for its failures at home will not preclude cooperation between China and its adversaries, but it may limit it.Xi Jinping’s recent visit to the United States produced The Chinese government has pledged to stem the flow of opioid drugs into the United States and partially resume military-to-military ties.Similarly, the China-EU summit meeting in December produced Resuming high-level dialogue on some trade issues. But the landmark Comprehensive Investment Agreement, the culmination of a decade of negotiations aimed at ensuring market access and equal treatment for EU companies in China, comes amid China’s support for Russia and attacks on civil liberties at home. remains ignored due to European concerns about When European Commission President Ursula von der Leyen visited Beijing last spring, she said of this important treaty:I couldn’t think of anything”

A weakened China could reduce incentives for cooperation, not just with Western countries.Beijing’s Belt and Road Initiative has become massive. Debt creation and collection companies, with negative political implications.Last year, alarm bells were rung in Beijing. sold off Over $20 billion in U.S. bonds and stocks.However thorough analysis China’s US foreign exchange reserves remained stable, but clearly people in beijing They prefer to “balance” China’s holdings as a hedge against the “weaponization” of trade by the United States.

Most directly, U.S. restrictions on advanced semiconductor machinery spurred China’s efforts. Develop your own capacity. This, combined with Beijing’s longstanding territorial aspirations, could make Taiwan, the source of 90% of the world’s advanced microchips, an even more attractive acquisition.

Of course, China is far from checking out. Exports still account for about 20% of China’s GDP, and foreign direct investment recovered slightly in 2023. However, as China’s role in the global economy declines and its sense of threat increases, the reason for China to commit to a cooperative framework will diminish. the establishment of its own international institutions such as the Asian Infrastructure Investment Bank; reduce the dollar’s dominance It reflects the domestic movement towards dictatorship.

These dynamics, aggressive nationalism and detachment from a hostile global environment, intersect more strongly in times of weak economic performance, and the need to keep important domestic constituencies happy blends seamlessly with nationalist campaigns. do. Beijing maintains that U.S.-led sanctions and restrictions on trade and investment are part of an attempt to maintain U.S. global dominance, even as it seeks appropriate economic tools. A threatened and weakened China is likely to adopt an isolated economic policy to protect itself and take a more aggressive stance against Western views on how it should behave.

Ronald H. Linden is a former professor of political science and chair of European Studies at the University of Pittsburgh.