China is nothing to worry about ـ Antoine Kanaan

Chinese ascendancy is only temporary.

That may seem like an odd statement. Really, it is, and it raises more than one question. Who shouldn’t be worried about China? In what sense is China nothing to worry about? Why is China nothing to worry about after all?

The United States of America, after all, has the most to lose from an ascendant China. Chinese leadership under Xi Jinping has proven itself to be spectacular at modernizing and industrializing China. Chinese economic growth has been impressively growing at a steady rate since the 1980s. Almost everything is “Made in China” these days. Chinese firms are now for the first time fighting for global positions, notably, Huawei and others in the tech industry. This has allowed the Chinese government to greatly increase its military spending. In fact, the US Department of Defense reported that the Chinese navy has already outgrown its US counterpart. China is rattling its cages – Hong Kong has been silenced, and there are fears that Taiwan may be next. This has caused much speculation amongst the media and academic circles: Will the USA finally be overthrown as global hegemon?

The stakes are high: US leadership is apparently built on its monetary and economic dominance. The US Dollar is the world’s number one reserve currency, and the United States is reportedly the world’s greatest economy. This allows the United States to fund its military endeavors, more importantly its world class navy. The United States maintains its global diplomatic position by relying heavily on these tools. China is challenging the US on all fronts, and with over three times the population of the US, Chinese hegemony seems inevitable.

China has already peaked.

While almost everything seems to be made in China these days, political decisions shall remain to be made in Washington, D.C.

The truth is that China has already peaked – given a slight margin of error, the Chinese will find it difficult to keep on growing its economy past this generation. What we have been witnessing for the past few decades is simply not sustainable, and very much akin to the Japanese Economic Miracle and global ascendancy that all but collapsed in the 1990s. So similar, in fact, that it is expected that the same reason that brought down the rise of the Japanese samurai will also be responsible for putting the Chinese dragon to sleep.

In this, as in all things, demographics is key. Yes, this is an intricate science, requiring many years of study, but even the most amateur demographist can explain to the layman its most basic principles, and then use them to explain the current situation between these two powers. To demonstrate my point, consider the economic sciences: while they are indeed very well developed, its most basic maxim is the law of supply and demand.

Similarly, when considering demographics in the scope of political economics, the following are considered fundamental rules. Really, it is only one rule, the rest being extrapolations off of that rule. Young populations drive expansion, growth, and change – older populations are an unproductive burden.

Understanding demographics.

Economic growth, military expansion, and cultural change are all guaranteed and caused by a growing youthful population. It is the young that seek to change the world, and that are ready to die for glory. It is the young that seek to work, to pursue new opportunities, to innovate a better future. The old seek to maintain whatever life in them that they have left, they seek to linger. This lingering itself is an economic cost, as the young must take care of them (because they can’t take care of themselves). Ageing populations truly are damning to an economy.

How does a population become “ageing”, and therefore, indicative of unsustainable growth? When life expectancy goes up and fertility rates go down, the median age of a population grows. Simply, less people are dying, but there are even less people being born. This means that people live longer, are an economic burden for longer, and that there are less and less young people to economically support them. The primary function of the youth no longer becomes growth, rather, sustainability – this will inevitably and invariably lead to decline, as the fundamental forces are stacked against them. Simply increasing fertility rates is not an option, as the productive population now has the burden of caring for both the elderly and the young. Reiko Aoiki (2012) argues that this is exactly what happened during Japan’s infamous “Lost Decade”, which was caused by demographic shifts from the post-World War Two era.

The US has already won.

When comparing the demographic situation between the USA and China, one can only come to one conclusion: The United States has already all but won. Forbes reported in September 2020 that China’s population is set to half by the onset of the 22nd Century, and the UN projected China to peak as early as 2031. That may seem like a long time, but in demographic terms, that’s really only two-three generations away. People born in the year 2020 are likely to live to the year 2100, by which time they will have grandchildren. The USA, on the other hand, is expected to grow by another 3% by that same time period. The Chinese labor force has been steadily declining for at least a decade now, an economic fact that they’ve offset with greater education. However, this is truly unsustainable, not with a projected halving of the population.

Yes, it is true, the USA has at the present time more old people as a percentage than China. However, that is exactly the point. The USA has a much healthier demographic, being much more stable and sustainable. That means that the US’s economic and military might is not really expected to change – if anything, it is expected to increase through the use of technological innovation. The Chinese population is quite the opposite, being expected to peak in the next decade, and to then sharply and steadily decline. Effectively, this means that China’s current economic and military power is in a sort of bubble. Unfortunately for the Chinese, this bubble is about to burst.

Antoine R. Kanaan, Editor in Chief of the Lebanon Law Review.

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