The world’s two most powerful leaders have just had very different years.
At the beginning of 2022, Joe Biden was widely portrayed as a failed president. His legislative agenda appeared stalled, while economic troubles seemed to guarantee devastating losses in the midterms. What happened instead was that the Inflation Reduction Act — which is mainly a game-changing climate bill — was enacted, the much-hyped “red wave” was a ripple, and while many economists are still predicting a recession, unemployment is still low and inflation has been subsiding.
By contrast, early this year Xi Jinping, China’s paramount leader, was still boasting about his triumph over Covid. Indeed, for a while, people commonly heard assertions that China’s apparent success in pandemic management heralded its emergence as the world’s leading power. Now, however, Xi has abruptly ended his signature “zero Covid” policy, with all indications pointing to a huge surge in hospitalizations and deaths that will stress health care to the breaking point; the Chinese economy seems set to face major problems over the next two or three years; and long-term projections of Chinese economic growth are being marked down.
China’s future, it seems, is not what it used to be. Why?
China’s ability to limit the spread of the coronavirus with draconian lockdowns was supposed to demonstrate the superiority of a regime that doesn’t need to consult the public, that can simply do what needs to be done. At this point, however, Xi’s refusal to make preparations to move on, his failure to adopt the most effective vaccines and get shots in the arms of his most vulnerable citizens, have highlighted the weakness of authoritarian governments in which nobody can tell the leader when he’s getting it wrong.
Beyond the imminent prospect of carnage, China’s long-running macroeconomic problems seem to be reaching a tipping point.
What has really struck me, however, is the way analysts have been marking down their longer-term projections for Chinese growth.
Recently Goldman Sachs, which formerly projected China as No. 1 by the mid-2020s, pushed that date back to 2035. The Japan Center for Economic Research, which previously projected Chinese leadership by 2028, then 2033, now says that it won’t happen for at least several decades. Some analysts don’t think it will ever happen.
None of this should be taken to detract from the incredible rise in Chinese living standards over the past four decades, nor as a denial that China has already become an economic superpower. But if you were expecting Chinese economic dominance, you may have to wait for a long time. As I said, China’s future isn’t what it used to be.