Thanks to communism, China’s economy may never outpace American dominance
Tiana Lowe Doescher
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Despite the Biden administration‘s humiliating displays of homage to the bureaucrats in Beijing, the Chinese Communist Party may very well need the grace and favor of the West, and the United States in particular, more than we need them. Despite Chinese President Xi Jinping‘s hopes that relaxing China’s draconian COVID lockdowns would spur economic renewal, Asian markets tumbled upon the news that Chinese economic expansion stagnated to just 6.3% on an annualized basis last quarter, falling far too short of economists’ expectations.
Recall that this growth measure is compared to the apex of Xi’s “zero COVID” policy, meaning the already weak growth figure represents an even more abysmal uptick from when the economy was shut down by the government.
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While Beijing’s belligerent territorial aggression from Africa to the South China Sea is still a very real (if not primary) cause for concern in the West, China may have suicide-bombed its own economy, with the U.S. coming out the winner in the end.
First, just take the 12.5% drop in the value of the yuan against the greenback. Whereas China’s central bank has tried to juice economic growth to no avail, the Federal Reserve‘s monetary tightening has coincided with a boom of the U.S. dollar without significantly threatening our economic growth or historically low unemployment rate. But the bigger picture of economic projections tells a greater story of the CCP’s poor choices.
In 2011, Goldman Sachs projected that China’s economy would outpace ours by 2026, achieving 150% of U.S. GDP around the midpoint of the century. By 2022, Goldman revised China’s point of parity to 2035, with a terminal ratio of little more than 1-to-1.
But earlier this year, the Economist reported an astonishing prediction from Capital Economics: China’s GDP, which will peak within the decade, will never outsize the U.S. economy.
The Capital Economics researchers point to two obvious factors, with which Goldman and other economists largely agree: namely, Beijing’s decision to suicide-bomb population projections with the disastrous one-child policy and its lag effects, as well as stunted productivity thanks to onerous regulations and resource drain for the aging population.
But whereas Goldman predicts the yuan will strengthen, adding 20% to China’s economy, Capital Economics believes the yuan will stay undervalued.
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Based on the market expectations of the Fed’s future actions on top of a bipartisan commitment to back away from Beijing markets, there’s every reason to concur with the latter in believing that the greenback will remain dominant against the renminbi.
China may regret allying itself with the fellow foulest human rights abusers on the planet, putting its crucial trade relationships with the West at stake. While Europe still has its share of apparatchiks who wish to acquiesce to China, it is American consumer demand, more than any coming from across the pond, that is robust enough to bolster Beijing possibly. Central planning, communist diktat, and abortion as a national family planning policy may have killed China’s one chance at global dominance, and only the free world could have saved the CCP from itself.