China’s Power May Have Peaked

America has been the world’s most dominant superpower since the end of the First World War, but its supremacy has not gone unchallenged. In the late 1930s, American dominance was first threatened by the rise of Germany and the Axis powers. When the Axis Powers fell, the Soviet Union became the United States’ new adversary. The bitter rivalry between these two superpowers deeply impacted American society, and ultimately culminated with the fall of the Berlin Wall in 1989, leaving the United States as the world’s sole superpower. This unrivaled dominance was short-lived, however, as Japan rose in power and flooded the American economy with investments in the late 1980s and early 1990s. Japan was America’s largest debtor for over a decade until its economy collapsed in the 1990s, and it was overtaken by America’s latest rival: China. 

In 1972, President Richard Nixon opened the United States and the West to trade with China. Over 50 years later, the Chinese economy exploded in size, becoming the largest exporter of goods and overtaking the United States as the world’s largest manufacturer. Meanwhile, growth in the American economy slowed, manufacturing jobs dwindled, and China became the United States’ largest debtor. Due to these realities, Americans have long feared China will become the inevitable successor to the United States as the world’s global superpower. However, for the very first time, China’s success does not appear to be so inevitable. 

Over the last couple of years, China has faced a number of crippling hardships, some of which were self-inflicted. The first—and perhaps most obvious—was China’s unique approach to managing the pandemic and its draconian “zero-COVID” policy. During the pandemic, China implemented mass testing and quarantines in government buildings and imposed strict lockdowns, sometimes leading to the shutting down of major cities for weeks or months. The unpopularity of these stringent measures led to mass protests in China at the end of 2022. Worse yet, in another attempt to demonstrate the superiority of China’s autocratic system over the West, Chinese President Xi Jinping refused to accept and distribute Western-made mRNA vaccines and instead opted to rely on its own homemade vaccines, which have been proven to be far less effective.

 Furthermore, the Chinese government failed to roll out its vaccine to its vast population successfully, and consequently lags behind most other major countries in its vaccination rate. This is particularly evident among its older population. Only 59% of those 80 and older have received at least one dose of the vaccine, and only 20% of that age group has received two shots and a booster, despite being the most susceptible to the effects of the virus. China’s low vaccination rate has put the government in the extremely difficult position of deciding when and how the country should reopen: while the policy has been detrimental to the Chinese economy, to abandon it would result in overwhelmed hospitals and hundreds of thousands of deaths

Further, the zero-COVID policy has inflicted deep wounds on the Chinese economy. Before the pandemic, China was by far the world’s largest manufacturer and viewed by multinational corporations as the best place in the world to produce their products. However, in order to abide by Xi Jinping’s harsh lockdown policy, large swaths of the country were completely shut down, hindering exportation and leading to unprecedented disruption in global supply chains. As a result, the world’s largest manufacturers have recognized that there is too much idiosyncratic risk associated with relying on just one nation as a source for manufacturing and have acknowledged the need to diversify their supply chains into other countries. These multinational corporations are seeking alternatives to China and have started diversifying their supply chains by moving operations to other low-cost-producing countries such as India, Vietnam, and Malaysia. In the past, China’s competitive advantage over other global powers derives from its unique ability to serve as the current ‘factory of the world.’ Now, however, the country is slowly losing this status—a loss that it may never be able to recover from. 

China’s zero-COVID strategy is not the only policy that has led to its hardships. The legacy of China’s one-child policy has been equally (if not more) devastating to the nation, and has led to demographic challenges that have only recently become palpable. In January of this year, it was revealed that China’s population shrank in size for the first time in six decades. Official statistics showed that during 2022, China’s population shrank by 850,000. While this decrease is relatively small for a nation with 1.4 billion people, it represents a massive demographic shift that is unprecedented in Chinese history.  In efforts to address this, China switched to a two-child policy in 2015, and in 2021, began allowing couples to have three children. However, the birthrate in China remains far below what would be necessary to keep the population stable, let alone growing. Coupled with a severely mismanaged pandemic, the government’s limitations on the number of children per family led to estimates that India will surpass China in population by April of this year

Finally, China is in a weaker position than it might otherwise be, thanks to the economic policy decisions of Xi Jinping. China’s economy has been sluggish in recent years, and lockdowns are only part of the problem. Specifically, economic growth in China was slower than expected in 2022. It will likely fall short of expectations again in 2023 if the Chinese Communist Party is unable to get a grip on the nation’s numerous economic crises. When trade with the West was opened to China in the early 1970s, the nation gradually shifted away from its authoritarian and communist past and towards a more dynamic economy with mixed elements and free market capabilities. However, since the start of his presidency, Xi Jinping has done everything in his power to expel any slight semblance of capitalism in the Chinese economy by hoarding economic control and consolidating power in the hands of the state. Xi Jinping’s harsh regulatory crackdown on the country’s technology industry and his censorious disapproval of the country’s most successful capitalists have discouraged entrepreneurship and stifled innovation. Meanwhile, economists have long worried about the consequences of the unwinding of China’s real estate boom and the heavy debt burden it has imposed on the nation’s economy.

The unpredictability and lack of transparency in the Chinese economy pose a number of uncertainties regarding its future prospects. However, it is certain that China and its rise to power have never been challenged in the way they are now, and the way in which Xi Jinping and the Chinese Communist Party handle these challenges may determine the fate of the nation and its position in the global hierarchy of superpowers. Facing profound demographic challenges, a failed COVID policy, a heavy debt burden, and a mass exodus of manufacturers and entrepreneurs, some experts argue that China has reached the peak of its powers. The upcoming year will provide clarity to much of this uncertainty; however, for the first time since its meteoric rise began, it appears that the long-held notion that China will surpass the United States as the world’s most dominant superpower is far from inevitable.