The People’s Republic of China is fearless in the face of many things that generally elicit fright and cowering. Islamic terrorism, for example, does little to impress the Chinese leadership. That leadership is content to clamp down on any whiff of Islamic independence movements in its realm’s provinces, while implicating the Islamic world outside of China with the vast Chinese money and payments system so as to forestall any criticism. China will bring Islam to heel in-country. If such a thing ordinarily courts terrorism, just let them try, appears to be the message.
As for the fearsome U.S. military, that is something else the Chinese toy with as opposed to treat with consistent respect. They hack away the U.S. national security apparatus (with what success one can only imagine). They pop their submarines up in places that come close to challenging American sovereignty. The attitude is brash, of impending superiority.
Then there is the industrial espionage, the flouting of the norms of international business, lifting corporate secrets via in-company moles. There is a healthy debate on how much such activity really can be economically damaging. It suffices to say that the norms, however enlightened or benighted they may be, are things China feels free not to be bound by.
A strapping, fearless, bring-it-on power. But for one thing. There is something that appears to get the leadership’s attention, perhaps even to give it the shivers. This is any wavering on economic growth. If growth in China comes in slow—something must be done.
The official statistics suggest that China’s growth rate now places in the 6% range, down from a sustained level several points above that. Per unit of urban population, which has been growing enormously in recent years, the growth rate is lower. Indeed, should the headline number come in any smaller, urbanization may have to slow or stop. The big, wrenching demographic phenomenon in the largest country in the world could pause, if not cease to be.
The prospect of China’s growing only at the rate of the United States is a portentous one. The U.S. is currently growing at about 3%. This rate could within easy statistical variances rise to 4, as the Chinese rate could sink to that level. An America and China growing at the same rate means that China will not overtake the world’s largest economy. Yet the precedence for China’s imperious moves against Islam, the world’s militaries and businesses, etc., is that this will happen in a decade or so as a matter of course.
As I wrote in my book on the history of the supply-side Reagan revolution in economics, Econoclasts, in 2009, a sustained high rate of economic growth has proven the sine qua non of geopolitical hegemony: “The unique ability of the United States to maintain a historic rate of economic growth over the long term is what has rendered this nation the world’s lone ‘hyperpower,’ as the French are sometimes wont to say.” That the stagflationary 1970s “proved to be an interregnum—as opposed to a new trend—is the most significant fact in the postwar economic history of the United States. It is also, from a geostrategic perspective, one of the most significant facts in the postwar history of world power relations.”
If China cannot overmatch the American rate of growth, not only will it not become the world’s largest economy. It will mean that China lacks an alternative model for the world to be impressed with.
It is interesting that Americans—their opinion leaders at least—have been rather indifferent to the economic growth plight of their country in these 2000s, when growth has been below the norm, at 2% per year instead of over 3%. It is almost an expression of the view that the United States should decline in geopolitical significance. When, on the other hand, people like J.P. Morgan’s Jamie Dimon say (as he did the other day), that we should have grown 40% instead of 20% over the last decade, the implication is that the United States should bestride the world more than it does.
I understand that Econoclasts in its Chinese edition makes quite the rounds in that country. Several lines in the introduction probably catch the attention of this readership: “The most important fact about the stagflation decade [in the United States], the 1970s, is that it stopped….Come a certain juncture [in 1982], stagflation up and vanished from the scene….Over the quarter century beginning in that year, America became fully one-third richer than the next richest economies, whereas a generation ago, these economies were at parity.”
How goes the 21st century will quite likely be how go differential rates of economic growth around the globe.