China Is a Threat Not Because It is Ascendant, but Because It Is on a Downward Trajectory

During his first decade in office, Xi demonstrated only too clearly that he prioritizes ideology over markets. His reappointment in October for another five years means his state-centric economic policies look set to continue. The reforms needed to revitalize China’s economy will likely remain on the backburner. Xi’s new leadership team has little economic experience and received a chilly reception from financial markets.

China’s economic woes are compounded by the demographic legacy of its one-child policy, which has left the country with an ageing population, a rapidly diminishing workforce and a soaring pension bill. Last year, China’s population declined for the first time since 1961. Its workforce peaked already, in 2014, and has been declining ever since. By mid-century, the working-age population is expected to decrease by a staggering 200 million, further dimming the country’s economic prospects.

In stark contrast to Deng Xiaoping’s policy of ‘hiding one’s strength and biding one’s time’, Xi’s ‘wolf warrior’ foreign policy has alarmed the world. As a result, China is operating in an increasingly hostile international environment. The United States, Japan and Taiwan are actively stepping up their military capabilities, and Indo-Pacific cooperation has been bolstered through a reinvigorated Quad. European countries are also responding, with the United Kingdom and Germany strengthening their military presence in the region.

Brands and Beckley remind us that anxiety and opportunity make a lethal cocktail. Chinese leaders may be concerned that they need to act soon, before their country slips into full-scale decline. ‘Once-rising powers,’ the authors note, ‘often become most aggressive when their fortunes fade, their enemies multiply, and they realize that they must reach for glory now or miss their opportunity forever.’ Some of the bloodiest wars in history were started not by rising powers but by countries that had peaked and started to decline. These include Germany in 1914, Japan in the late 1930s and, of course, President Vladimir Putin’s Russia in 2022.

With the world’s attention focused on Russia’s war in Ukraine, China may feel that the time for action is at hand. The composition of Xi’s new leadership team highlights this risk. During his first two terms in office, Xi had to share power in the Politburo Standing Committee with the moderate Youth League faction. Now that China’s highest decision-making body is stacked with Xi loyalists, there’s likely to be less room for debate and dissent, even on key strategic decisions.

In March 2021, Admiral Philip Davidson, who at the time was in charge of the US Indo-Pacific Command, controversially claimed that China could trigger a conflict over Taiwan as soon as 2027. Brands and Beckley think it could happen much sooner. That might seem alarmist, but the authors present a strong case.

Robert Wihtol is an adjunct faculty member at the Asian Institute of Management and former Asian Development Bank country director for China and director general for East Asia.This article is published courtesy of the Australian Strategic Policy Institute (ASPI).