Maybe we are exporting a bit too much fentanyl?
China’s Dangerous Decline
Washington Must Adjust as Beijing’s Troubles Mount
Far from good news, a weak, stagnant, or collapsing China would be even more dangerous than a thriving one—not just for the country itself, but for the world. Dealing with a failing China could therefore prove harder for the United States than coping with the alternative has been. If Washington hopes to do so successfully—or at least fend off the worst of the fallout—it needs to reorient its focus, and fast.
Washington’s record in dealing with rivals in decline is not auspicious, and coming up with a new policy to manage China’s descent will not be easy. To make matters worse, it is unclear whether the Biden administration has begun working on the problem. But that is no reason for despair. There are a number of changes, some relatively easy, the United States could make that would greatly improve its odds—especially if it starts making them soon.
As China stalls, it is increasingly unlikely to overtake the United States as the world’s largest economy. Instead, with innovation and entrepreneurship stifled and productivity declining, China will find itself mired in the middle-income trap. Domestic living standards may flatline or fall. And smaller budgets and bureaucratic incompetence will make it harder for Beijing to deal with its many dangerous preexisting conditions: a rapidly aging population, a massive debt load, a severe shortage of natural resources (including energy and clean water), and a wildly overheated real estate sector, the failure of which could pull down the entire economy. (Chinese households have more than two-thirds of their savings invested in property.)
