Can China no longer afford to compete economically in the manner it dreams of? We in the West judge China's economic potential based on a linear growth of its past glory days. What if that assumption is incorrect?


China’s Crisis of Confidence

What if the new era of great-power competition was over before it had even begun? Many of today’s fears about a multigeneration conflict with Beijing rest on linear extrapolations of yesteryear’s data, harkening back to a time when China appeared on track to supplant the United States as the world’s largest economy. Yet more and more signs point to a China that is fully unprepared for the competition with the United States it once sought.


China’s economy, long in decline, is now in freefall—thanks to Chinese leader Xi Jinping’s mismanagement. Case in point: This year, the U.S. economy is forecast to grow faster than China’s for the first time since 1976, with strong indications that China has entered a prolonged era of slow growth. More surprising is that Xi, in an attempt to stabilize China’s finances, has largely abandoned his ambitious plans to overhaul China’s growth model, choosing instead to double down on the very economic policies that got China into today’s economic bind in the first place.


Put differently, Xi blinked.


Xi’s reversal speaks volumes. It suggests he lacks confidence in his own plan to transform China’s unsustainable economic model into one that can deliver on the Chinese Communist Party’s (CCP) promise of “high quality” growth. More important is that China’s fizzling economic miracle may soon undercut the CCP’s ability to wage a sustained struggle for geostrategic dominance.