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The People’s Republic of China’s meteoric rise has taken America by storm, and Stanford University has been no exception to the rest of the country. It has become a staple topic in seemingly every political science and international relations class under the sun. China is often mentioned in other disciplines like economics, earth systems and more. All this, plus the crazed mainstream media, leads to an impression of a looming Chinese juggernaut.
Mainstream analysis and opinion emphasizes a Chinese economy growing at about 10% per year for the last twenty years. Its growth is remarkable, and it is the largest, fastest-growing economy ever. In one generation, GDP per capita rose from $400 to $3500. This means it has doubled three times with hundreds of millions rising out of poverty. China’s experience is a testament to the power of free markets. It has been a genuine great leap forward.
Indisputably China’s citizens are living better lives than they ever have since the communist revolution and this generation has opened up opportunities for the next generation to continue progressing towards a brighter future. This phenomenon is something for all of humanity to applaud and encourage.
However, from the Western perspective, particularly America’s, the rise of China coupled with a perceived decline of the United States has led to outlandishly apocalyptic predictions and anxiety. The United States and Europe are undergoing one of the worst recessions in recent memory. Thus, talk of the decline of America is at a fever pitch–but this is not the first time it has been.
Before China there was Japan, and before Japan, the USSR. Each of these powers were at some point predicted to surpass the United States economically and, inevitably, as a global power. None of these predictions came to fruition: the USSR dissolved and Japan has stagnated for the better part of a generation. History has shown that betting against the U.S. is not a profitable prospect.
So what is wrong with China? Besides the government’s violent opposition to human rights, minority groups and their own citizens’ basic freedoms, China’s system has the seeds of its own decline built in. The Chinese government’s legitimacy stems from continued economic prosperity–a dangerous game for the Communist Party to play. It is one that will lead to a clear winner and loser. This brings to mind a now famous exchange between US president George W. Bush and Chinese premier Hu Jintao. Bush asked Jintao, “What keeps you up at night?” Bush confided that he stayed awake worrying about another terrorist attack. Jintao quickly replied that it was creating 25 million jobs a year.
So what happens when- not if-the Chinese government can no longer create jobs, opportunity or prosperity? China’s citizens will not accept decline; they will want a say in their governance and will want the government to extract itself from the private realm. Will China’s authoritarian government be willing to cede power? Whatever the outcome is, decline is inevitable.
If that isn’t convincing enough then here are some numbers. China’s growth is based on the size of its labor force, urbanization and movement from agriculture to manufacturing, and education of its populace. All these trends are destined to decline. Most damning of all is China’s demographics. Due to the success of its one-child policy and its aging population, the size of China’s working-age population will decline 15% by 2040.
Not only will there be fewer people that can work, there will also be more dependents on China’s leviathan welfare state than contributors. It is similar to the problem the US will face as the Boomer generation starts to demand Social Security checks and bankrupt the system since they will outnumber the number of citizens contributing to the fund–except it will be exponentially worse.
With regards to education, the Chinese government has recently announced that it will set a quota on the amount of doctorate degrees that are awarded a year. The reason at the surface is that the number of Chinese college graduates have increased much faster than the economy can employ them. From 1998 to 2004 total undergraduate enrollment increased from 3.4 million to 13.3 million. However, a large number of highly-qualified college graduates are either unemployed or working menial blue-collar jobs.
This highlights the underlying reason for China’s new policy. The Chinese Communist Party has been watching the Arab Spring with rapt attention. Their biggest fear is Tahrir Square becoming a Tienanmen Square. They have clearly done great research to discover the underlying causes of the Arab Revolutions, particularly in Egypt. What they surely discovered is that a large amount of the protesters were college graduates who were unemployed or doing menial work for much less pay than they expected with a college diploma. It is no coincidence that China’s new policy limiting the amount of doctorates awarded came at the time it did and I would expect that we will see similar policies for lesser degrees.
These declining trends and the corrupt, bloated Chinese government spell an inevitable and looming decline in China. It is something to start worrying about if you are an investor or a policymaker. There will be more agitation for more political rights and freedoms from China’s rising classes. If the government grants them, massive reforms and a restructuring of the political system will be inevitable. During this time of extreme change the Chinese economy will most likely decline. If the Chinese Communist Party refuses to relinquish power and follows its bloody playbook of repression, the ills of the system will remain uncorrected. This may, in the future, give rise to a revolution–and economies don’t grow during those.
Joshua Alvarez is a senior International Relations major and president of the Alexander Hamilton Society. He is currently working on a thesis “Turkey’s Grand Strategy” for the CISAC undergraduate honors program. Please contact him at josh.alvarez@stanford.edu with questions or comments.
