Experts are of the opinion that China will soon either end up conquering the world or all its efforts will come to nothing and it will fall flat on its face.
Depending on which pundit you may have listened to most recently, China is either about to conquer the world or fall flat on its face. Some analysts believe China has found its footing and is running circles around the United States on the global stage. Others believe that “The World According to Xi” is riddled with inherent contradictions and is finally being seen for what it really is. The truth appears to be somewhere in the middle. As has increasingly become the case when reporting the news, more and more geopolitical and economic analysts are succumbing to using a sledgehammer and taking one extreme side of an issue or the other. Doing so in the case of China often completely misses the point; pontificating about China does not lend itself to extremism, but rather, nuance.
What we are witnessing in the slugfest between China and the US is neither the imminent demise of the US-led post-War global order nor the inevitability of a new order based on China’s view of the world. The post-War order was not created and did not come to define the global legal, regulatory, trade, and investment regime of the past 70 years in one fell swoop. It was the result of decades of carefully crafted multilateral diplomacy that will not simply be unravelled by a single American President. If it is truly to be redefined, that, too, will take decades, and implies the complicity of scores of countries.
China’s view of the world includes the inevitability of its rise in the next decade to become the leading economic, political, and technology power. Assuming that turns out to be true, it does not imply that the US slowly withers and dies, or that the post-War order it was so instrumental in creating becomes irrelevant. Quite the contrary—it will either be modified or enhanced, but not simply replaced on a wholesale basis. Let us also not forget that this order has been absolutely critical to China’s rise. It would not be in China’s interest to see it replaced, nor would it for almost any other nation. That is something many “experts” seem to forget.
Despite China’s dramatic and undeniable economic rise—which it is worth adding, has for the past 20 years been catalogued based on some dubious economic statistics published by the Chinese government—its GDP in 2017 was still roughly two thirds of that of the US (approximately $13 trillion versus $19 trillion). In 2016 and 2017, China’s official growth rate (as declared by the government) was 6.7% and 6.8%, respectively. Yet, the World Bank published a report last year stating that China’s actual annual GDP growth rate in 2016 was 1.1%.
Many countries are masterful at manipulating statistics, and China is certainly not alone in that department, but, Beijing has been crafting an alternate statistical reality for a long time. Despite this, analysts of many persuasions have unquestionably used China’s official statistics to craft their analyses, either wilfully ignorant of the view of multilateral institutions or having chosen to ignore them. The more non-Chinese analysts jump on the Chinese government’s statistical bandwagon, the more they perpetuate China’s own view of the world, helping make it a self-fulfilling prophecy.
Lately, some of the Western press has highlighted the many challenges the Chinese economy faces as President Xi pivots from Deng’s reformist agenda to one more akin to Mao’s Stalinist model. China does indeed face some severe economic and political headwinds, some of which are entirely of its own making. Massive debt accumulation, the real estate bubble, and the ongoing challenge of reining in state-owned enterprises are prominent among them.
But, in fairness, these are not new issues, and every time economists have predicted a hard or soft landing, it has usually resulted in no landing at all—the result of the Chinese government’s ability to drink its own Kool Aid and craft its own reality. Xi’s challenge is to continue to keep all the plates spinning while the Chinese economy marches on, as it has done for decades, in spite of the ongoing headwinds. My guess is that he will do just that.
At the same time, the US is rapidly hurtling further into the arena of the unknown, but it is taking much of the world with it. If it, or the global bodies it helped create, were no longer relevant, the world would not care quite so much about what happens in Washington. While plenty of countries around the world are embracing Beijing and its One Belt One Road initiative, many are doing so with a wary eye, at the same time wondering what will happen next in America. Should its political fortunes change in 2020, some of these countries will be glad they held their options open. On the other hand, the very idea that America would willingly throw itself into an abyss of its own making is deeply and perhaps permanently unsettling to much of the rest of the world.
Some of the pundits that so many of us rely upon to interpret what is happening in the world at times cast the world in black and white terms, forgetting that there is, or ever was, a middle ground. Many of them are going the way of much of the global media, taking one side or another, whether for ratings, for applause, or to adhere to their own political persuasion. They are not doing anyone, much less themselves, a favour.
My hope is that, going forward, nuance will be reintroduced into political and economic punditry—not just vis-à-vis China, but more generally. That’s the way it used to be, in the good old days. If the pundits cannot seem to get it right, will we end up having to rely on state run media and extremist news outlets for most of our news and analysis? Perhaps we will be better off turning off just the news entirely and interpreting world events without the help of the “experts”. After all, many of the readers of this newspaper and others know as much or more about what they write about than they do.
Daniel Wagner is CEO of Country Risk Solutions and co-author of the new book AI Supremacy.