On the menu today: A presidential primary is full of blink-and-you’ll-miss-it news stories; today, Chris Christie is accusing Ron DeSantis of playing politics during his response to Hurricane Idalia, a line of attack that doesn’t quite square with the cordial cooperation between Florida’s state government and federal disaster-response agencies. By comparison, the current tumult in the Chinese economy is the sort of story that doesn’t get a lot of attention on the campaign trail or in the news cycle but is much more likely to have far-reaching consequences. The only thing more challenging for the U.S. than an economically rising China may well be an economically declining China, even though the attitude of most of the administration is that of Chip Diller: “Remain calm, all is well.”
The Chinese Economy and World History
Over the weekend, our Jack Butler wrote an ode to the late Paul Johnson’s history of the 20th century, Modern Times: The World from the Twenties to the Eighties. (Later editions were updated to include the 1990s.) It’s difficult to succinctly summarize an 870-page history book, but as Jack writes, “the maladies that have afflicted the 20th century — an excessive faith in politics and in the state, an abandonment of the individual as the defining moral unit in favor of groups, the weakening of moral certitude — have at their root a contempt for the person as such, and for his dignity.”
If I had to (insufficiently) summarize Johnson’s argument, it’s that nothing that happened was destined to happen. Individual choices can alter and direct the course of history in ways large and small, and giant, sweeping changes to nations and societies rarely come out of nowhere, even if only a handful of people are attuned to the changes on the way. It’s worth keeping those thoughts in mind amidst the daily dose of chaos that is the modern U.S. news cycle.
Today, one of the big political headlines is Chris Christie’s accusation that Florida governor Ron DeSantis “put politics ahead of his job” because he didn’t meet with Joe Biden when the president visited Florida to survey the damage caused by Hurricane Idalia. Never mind that so far, the Biden administration has no gripes with how DeSantis and his state government handled their response to the hurricane, and DeSantis has no gripes with how the Biden administration handled its response to the hurricane, either. As bad as Idalia was, it could have been much worse and it made landfall in a less-populated area than Hurricane Ian a year earlier, with only one death reported in Florida so far this time. When Biden was asked about DeSantis not meeting him, the president responded, “No, I’m not disappointed. He may have had other reasons because– but he did help us plan this. He sat with FEMA and decided where we should go, where it’d be the least disruption.”
This is unlikely to be remembered in 48 hours, never mind next year or ten years from now. But what will be remembered? How will we look back at this era?
A lot of the biggest stories of our lives were preceded by a lot of ominous rumblings. The rise of al-Qaeda, the troubles in the U.S. real-estate and finance markets in the years leading up to the Great Recession, the rise of ISIS, the emergence of Covid-19, the Russian invasion of Ukraine — in crisis after crisis, the signs, portents, and precursors were all there for those willing to look. We just didn’t hear them discussed as much as we probably should have — in some cases, because we were getting a lot more coverage of stories such as “summer of the sharks.”
(The New York Times, January 6, 2020: “Mr. Li is one of 59 people in the central city of Wuhan who have been sickened by a pneumonia-like illness, the cause of which is unclear.”)
Probably one big story that the average American is hearing far too little about is the current tumultuous state of the Chinese economy, and how that is likely to influence the future decision-making of the government in Beijing. We’ve been hearing for decades that China was building an economic powerhouse that was on pace to overtake the U.S. economy. And now, it may well never happen: “China is no longer set to eclipse the US as the world’s biggest economy soon, and it may never consistently pull ahead to claim the top spot as the nation’s confidence slump becomes more entrenched. . . . [I]t will take until the mid-2040s for China’s gross domestic product to exceed that of the US — and even then, it will happen by ‘only a small margin’ before ‘falling back behind.’ Before the pandemic, they expected China to take and hold pole position as early as the start of next decade.”
While I was away earlier this month, our Dominic Pino wrote about the Chinese economy twice. Separately, China’s fertility rate dropped to an all-time low. (It’s rather difficult to make a lot of babies a generation after a country enacts a one-child policy in a culture where sons are valued so much more than daughters.)
Desmond Lachman, a senior fellow at the American Enterprise Institute, wrote for NR earlier this week:
The Chinese economy seems to be in the eye of a perfect economic storm. There is now every sign that the country’s property and credit bubbles are bursting. They are doing so at the same time as the country is having to contend with intensifying U.S. trade restrictions and a slowing world economy.
Compounding matters have been the egregious policy mistakes made by Xi Jinping, who has abrogated for himself the most economic power of any Chinese leader since Mao Zedong. These mistakes include the zero-Covid policy that shut down large parts of the economy, a confrontation with the country’s dynamic high-tech sector, and the rolling back of some of Deng Xiaoping’s market-oriented economic reforms that helped put China on its earlier high-economic-growth path.
How do authoritarian regimes respond to bad economic times? Usually by scapegoating foreigners and internal dissenters and critics, fanning the flames of nationalism, and sometimes using military aggression or outright war. And Xi has made it exceptionally clear that he values power, control, and the greater glory of the Chinese state over mere economic prosperity. Xi’s message to Chinese young people who are discouraged by their economic prospects and see jobs that require enormous amounts of hard work for meager pay, is “eat bitterness.” Quite the inspiring slogan! Hard to believe there are Chinese youth who don’t leap out of bed every morning, eager to take on the day!
Authoritarian regimes also routinely respond to bad news by lying, and the Chinese government has gotten into the habit of simply not releasing economic numbers when they don’t tell the happy success story that Beijing wants the world to hear. But this just makes foreign investors even more nervous; as the Post’s Catherine Rampell put it, “However bad the numbers had previously been expected to be, investors and the general public can now reasonably assume they’re worse.” Russia and Saudi Arabia are cutting their oil production, on the expectation that Chinese demand just isn’t going to be as high as previously expected for the rest of the year.
While the Chinese economy is stumbling and floundering, the nationalist rhetoric is getting hotter. To hear the Chinese state-run media tell it, the U.S. military-industrial complex is trying to start a war over Taiwan, while peaceful, easygoing, laid-back Xi Jinping and the Chinese navy are just sitting there, minding their own business. It’s totally normal for 16 different Chinese naval ships to sail around the island, and 73 People’s Liberation Army aircraft to fly past the median line of the Taiwan Strait and into the key regions of Taiwan’s air-defense identification zone in a three-day span! That’s not an intimidation effort at all!
Late last month, the New York Times’ Bret Stephens asked how the U.S. could best manage China’s economic decline. He concluded:
We should not seek a new cold war with China. We cannot afford a hot one. The best response to China’s economic woes is American economic magnanimity. That could start with the removal of the Trump administration tariffs that have done as much to hurt American companies and consumers as they have the Chinese. Whether that will change the fundamental pattern of Beijing’s bad behavior is far from certain. But as China slides toward crisis, it behooves us to try.
First, whether or not we’re seeking a new cold war with China, the actions of Xi Jinping and the Chinese state have made clear they think they’re in a new cold war with us. As the Washington Post’s Josh Rogin lays out, the Biden administration has spent months bending over backward and making nice at summits, desperately trying to get the Chinese state to dial back the antagonism just a notch, with very little to show for it. The primary concession Chinese officials have made at these meetings is signaling a willingness to hold more meetings.
Second, convincing Americans that it is in our best interest to cut the Chinese some slack on tariffs is going to be an exceptionally tall order. We’ve still got tariffs in place on products from a whole bunch of allies, never mind a country that behaves like China.
So why is there relatively little discussion of the economic tumult in China, compared to the daily dose of mudslinging in the GOP presidential primary? Part of it is that the U.S. mainstream media loves stories about Republicans attacking other Republicans, and a GOP presidential primary is peak season for those kinds of stories. Part of it is that a chunk of the U.S. public rarely realizes how events in foreign countries affect their lives until it’s abundantly clear and in their faces.
And another big part of this is that whoever is in power in the U.S. government wants the American people to believe that everything is under control, the administration is on top of every challenge, and there’s nothing but smooth sailing and sunny skies ahead. “Remain calm, all is well,” as Chip Diller pleaded.
And if Biden seems excessively sanguine about developments in China, there may be less of a partisan division on this issue than one would expect. Here’s how former president Trump characterized Xi Jinping this past July:
“Think of President Xi. Central casting, brilliant guy. You know, when I say he’s brilliant, everyone says, ‘Oh that’s terrible,’” said Trump during the event. “Well, he runs 1.4 billion people with an iron fist. Smart, brilliant, everything perfect. There’s nobody in Hollywood like this guy. I got them to pay us $28 billion because they screwed our farmers for years.”
Again, Chinese leaders are convinced they’re in a cold war with us. Our leaders are adamant that we’re not in one with them.
ADDENDUM: In case you missed it yesterday, wondering when it’s time for the longshots in the GOP primary to hang it up and call it a day; the irrelevant United Nations holds its big annual meeting to yawns, with a lot of high-profile no-shows; and remembering two years ago, when the Biden administration insisted it had “enormous leverage over the Taliban.”