Far from China being on track to supplant the US as the world’s largest economy, says Craig Singleton in Foreign Policy, more and more signs point to Beijing being woefully unprepared for the competition. The Chinese economy is in freefall thanks to Xi Jinping’s “mismanagement” – this year, the US is forecast to grow faster than China for the first time since 1976. Even more surprising is the fact that Xi, in an attempt to stabilise China’s finances, has abandoned ambitious plans to switch the country’s economy from sweatshop manufacturing to “quality growth”.
In other words, “Xi blinked”. And that matters. It shows he lacks confidence in his own plan to transform China’s fortunes. But more importantly, the country’s “fizzling economic miracle” may soon undercut its push for geostrategic dominance. Outbound Chinese “development loans”, a key tool for Beijing to expand influence across Asia and Africa, have cratered by 96% since 2016, from $75bn to around $4bn. The value of Belt and Road projects has been falling since 2013, from an annual average of $255bn to $14bn last year. And at home, for the first time in decades, China’s state-owned enterprises, private companies and citizens will all be forced to compete for pieces of a pie that’s no longer growing. Not only does that threaten top-level projects like the modernisation of the army, it also raises the chance of serious “civil unrest”. The new era of great-power competition might be over before it has even begun.