If you follow developments out of China at all, you have likely noticed a spate of bad news recently. For years, even decades, it seemed that China could do no wrong in its growth toward becoming a major world power: China reported economic growth of 10% and up every year; it was becoming the hub of manufacturing for the entire world; and as its economy grew, its clout on the world stage increased rapidly. Pundits on the left (and occasionally on the right as well), often with overt admiration for the Chinese model of authoritarian state-directed crony capitalism, widely predicted that China would supplant the U.S. as the world’s leading power some time not too far into the 21st century.
Suddenly that’s looking much less likely. What happened? The fault lines have been there for a long time, but well-concealed by a regime with tight control over information flow, let alone by a Western press with a deep hatred of the West and not hiding its cheerleading for success of the Chinese model. In the last few months, as conditions have deteriorated, the regime has lost a big piece of its ability to keep the lid on.
Here’s my two cents: If the goal is long-term success for the country and the people, the Xi regime is doing pretty much everything wrong.
As a Manhattan Contrarian reader, it will not have come as a surprise to you that China would soon be facing serious reverses. As long ago as a post in September 2018, I asked “What Are The Long-Term Prospects For China?” That post reviewed various destructive policies of the Chinese government that included things like the pervasive surveillance system, tight and increasing state control of investment, suppression of religion and of ethnic minorities, and more, and concluded by asking: “[I]n a world of tough competition for talent and investment, what does China really have to offer?” In another post in March 2021, I asked “Is China About To ‘Win’ The Battle For The Future?” That post reviewed the prognostications of multiple pundits, on both left and right, predicting, often in exactly those words, that China was “winning the battle for the future.” But my conclusion was that various self-inflicted wounds stemming from the authoritarian governance model would soon undermine Chinese progress:
China’s system has enormous disadvantages, mostly self-inflicted by the ruling Communist Party, that show every prospect of greatly hindering and undermining its ongoing economic advance.
So with that introduction, let’s review some of the latest news:
Covid. Since the outset of the pandemic, China has pursued what it has called the “zero Covid” policy. Somehow Xi or others in the regime got the idea that they could accomplish the ultimate demonstration of the superiority of their system by imposing the strictest lockdowns and other control measures, and thereby preventing the disease from ever spreading in their country. In a post on April 16, 2022, I described conditions in Shanghai at that time, largely as then reported by The New York Times:
China has adopted an absolutist “zero Covid” policy without any rational weighing of the actual costs and benefits of the policy. Young adults and children with little to no risk of death from the disease are locked in their homes, often starving, and deprived of all normal human social contact for weeks and months on end. And since the disease has not yet worked its way through the population as it has elsewhere, China has no end in sight for these draconian policies. . . . The New York Times reports on April 10 about how the recent Shanghai lockdown is affecting the residents: “Residents have swarmed the police officers who enter their neighborhoods wearing white protective suits. They have shouted out their windows, demanding to be given supplies. Others have banged pots and pans in protest. . . . “We just want to eat, is that so hard?” [residents] yelled.”
The post included this picture of a street scene from Shanghai, with police and health officials in haz-mat suits and no civilians to be seen outdoors:
At the time, the Worldometers site, using official Chinese government data, was reporting what appeared to be a huge success for the zero Covid policy, at least if the only measure of success is number of cases and deaths from Covid and you think that imprisoning people in their homes for months is OK and that official Chinese government data are real. The death rate for China from Covid at that time was given as 3 per million population. My comment was that the official death rate “is highly likely to be wildly understated, but nobody knows by how much, because any local official daring to report accurate information would likely be fired if not jailed.”
By December, there were widespread reports that Covid was surging in China — although if you followed the Worldometers site, you could still not find the surge in the officially-reported data. But some Western news sources at last started to get curious. Here is the latest from NBC News today:
SHANGHAI — Patients are crammed into hallways, stairwells and lobbies, and still the sick keep coming. In scenes reminiscent of the start of the coronavirus pandemic in 2020, Chinese hospitals are struggling to cope with a surge in Covid-19 cases following the country’s decision to scrap its “zero-Covid” policy in early December.
So is the Chinese government starting to get honest?
After international criticism that it had not been transparent about the severity of the outbreak, the Chinese government said last weekend that it had recorded 60,000 Covid-related deaths since Dec. 8.
That’s a start — Worldometers as of today continues to show a total of only 5,272 Covid deaths in China. But NBC continues:
An estimate on Tuesday by Airfinity, an independent forecaster based in London, put the number of Covid-related deaths in China since Dec. 1 at 608,000, 10 times the official figure.
608,000 deaths would be about 425 per million population. That’s still a fraction of the U.S. rate (which is about 3,300 per million), but those 608,000 deaths in China are only in the last month and a half. The real number in China since the start of the pandemic remains anybody’s guess, and the current surge of cases and deaths could well result in rapid catch-up to the rates in the Western countries that had far less severe restrictions. The Chinese have lived in near prison conditions for the last three years — and for what? To make the leaders look good (by some twisted definition of “good”)?
Population. The Wall Street Journal reported on January 16, based on official Chinese data, that China’s population had actually declined year-on-year in 2022 over 2021.
The National Bureau of Statistics said Tuesday that China’s population dropped to 1.412 billion in 2022, from 1.413 billion in 2021. It was the first decline since the early 1960s, when the country was devastated by famine after Mao Zedong launched his “Great Leap Forward.”
It may sound like a rounding error, but the difference between 1.413 billion and 1.412 billion is a whole million people. And the decline represents almost entirely excess of deaths over births. In simple terms, nobody is having children in China any more. The data on number of births are quite astounding. From the WSJ:
The number of births declined to 9.56 million from 10.62 million in 2021, Tuesday’s data showed. China’s birthrate—the number of births per thousand people—dropped to 6.77 in 2022, compared with 7.52 in 2021.
By contrast, according to Macrotrends, the U.S. birthrate for 2022 was 12.012 per 1000 people — close to double the Chinese rate. The U.S. rate is right around the level that is sufficient to maintain the population; and with ongoing rapid immigration, the U.S. can expect continued increases in population. For China, at this extremely low birth rate, the population is almost certain to continue to decline. And the way the math of this works, unless the birth rate reverses quickly, the decline will accelerate. The UN put out a prediction in late 2022 that China’s population would decline by nearly half by 2100, to under 800 million. And others have even more dire projections. (A University of Wisconsin study in 2021 projects a population for China in 2100 of between 350 and 450 million.)
China also has negative net immigration (that is, more people emigrate than immigrate), according to Macrotrends. What foreign citizen would want to voluntarily enter this prison/surveillance state, where ethnic minorities are treated like second-class citizens when they are not put into forced labor camps?
Economic “Growth”. As reported in many sources, citing official Chinese government data, China reported economic growth for 2022 as 3%. Here is a quote from Reuters, January 17:
2022 GDP grows 3.0%, far below official target. . . . China's economic growth in 2022 slumped to one of its worst levels in nearly half a century as the fourth quarter was hit hard by strict COVID curbs and a property market slump, raising pressure on policymakers to unveil more stimulus this year.
3% year-on-year economic growth is far lower than the levels of growth reported by China for the past several decades. Compared to the U.S., the 3% may still not sound too bad, until you realize, again, this is official Chinese statistics. There could be endless amounts of padding in there.
So overall, how is Xi doing? I’d say, he’s giving an object lesson on how to drive a country into the ditch. Until the government is ready to accept a large role for freedom and entrepreneurialism outside state control, they are likely in for a long period of stagnation. I don’t see Xi and his crowd going that route.