Preparing for China’s Rapid Rise and Decline...

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China’s rise, one of the defining U.S. national security challenges of our time, has deservedly received attention in each of the last decades-worth of unclassified U.S. government strategies. Unfortunately, China’s pending decline — the one that is likely to occur soon after its rise — has received significantly shorter shrift, earning brief references to an aging population in Northern Asia in the 2015 and 2011 versions of the National Military Strategy. And yet, China’s rapid transition toward a downward trajectory will pose a unique set of national security challenges for the United States that could prove even more difficult than those posed by China’s rise. If this lack of high-level public discussion translates to lack of action, it will be to the detriment of U.S. national security. The time to prepare for China’s descent is now, while the challenges that come with it still sit at the edge of the discernible future, and not at the edge of American shores.

By the discernible future, we are not speaking of determinism or an inevitable consequence of events set in motion long ago. These are the wares of soothsayers and snake oil salesmen. Rather, we are speaking of long-term trends that can readily be forecast — trends such as shifting demographics, economic growth, and government spending — which can be persistent and generally follow long-standing patterns that have been common around the world and across time.

Through this lens, long-term trends indicate that China’s development is on a positive trajectory in one sense. The Chinese economy has enjoyed consistent growth for the past several decades and, according to International Monetary Fund estimates, it is on track to claim the title as the world’s largest economy in terms of market exchange rates by 2030. (In terms of purchasing power parity, China already holds the top spot.) Barring any unforeseen catastrophes, PricewaterhouseCoopers projects that China’s economy will continue along this path, accounting for 20 percent of the world’s gross domestic product at purchasing power parity by 2050. This long upward economic path has in part been driven by China’s one- and two-child policies, which have allowed the nation to avoid the burdens accompanied by the burgeoning population and destabilizing youth bulge common among other developing countries.

As the long-term consequence of its one- and two-child policies, however, China will soon be confronted with an aging working population. This is likely to translate into declines in annual gross domestic product growth, increases in health expenditures both per capita and as a share of gross domestic product (perhaps as much as 10 percent by 2030 when pensions are included), and, ultimately, potential declines in material power. Indeed, forecasts of the Global Power Index, a measure developed in coordination with our own Frederick S. Pardee Center for International Futures and used in one of the National Intelligence Council’s Global Trends reports, suggest Chinese general capabilities will peak and immediately begin to decline near the year 2050 — just two decades after its material power surpasses the United States in approximately 2030. This decline is forecast to continue through the end of the century, and, while China is likely to remain the single-most powerful country during this time (with a forecasted 19.2 percent of the world’s power in 2100 relative to India’s 14 percent and the United States’ 13.2 percent), its material power is never forecast to exceed the likes of NATO (with a forecasted collective share of world power at 29 percent in 2100).

Notably, these measures capture general material capabilities, but are not so refined as to be used to understand how effectively these capabilities are expressed. To be sure, nations with different resource availability can leverage their material capabilities in more or less effective ways. Thus, while China is expected to have the potential for growing material superiority in the coming 30 years followed by a sudden, swift atrophy, its strengths in some areas are likely to persist (e.g., supply-chain and debt dependencies stemming from One Belt, One Road) while experiencing continued — and perhaps growing — weakness in other areas.

For example, China’s military has yet to accrue combat and other technical and leadership experience to anywhere near the breadth and degree of the U.S. military or that of many U.S. allies. Even subtracting this human element, the tremendous capital stock in high quality materiel and technological expertise the likes of that possessed by the U.S. military cannot be built overnight — certainly not with China’s military spending having held at only 2 percent of gross domestic product over the last 17 years — nor can it be stolen. Acquisition and mastery of technology is often an expensive, decades-long process — one that may require more time than China has as it grows old before it gets rich.

Meanwhile, the United States enjoys several relative structural advantages. Demographically, the median age of the U.S. population has grown and is forecast to grow at a much lower rate than China’s in the coming decades. Specifically, the U.S. population’s median age is expected to grow from 38 to 43 from now to 2050, as compared to the Chinese population’s transition from and 38 to 48, according to Pardee Center forecasts. To place these numbers in context, the U.S. population in 2050 will have an average age similar to Japan nearly two decades ago while the Chinese population will have an average age similar to Japan today, which Prime Minister Shinzo Abe states is facing a “national crisis” due to an aging society. As for the material wealth of the average Chinese and American in 2050, the Pardee Center projects that China’s gross domestic product per capita at market exchange rates will be roughly equivalent to the United States’ gross domestic product in 1992, at $37,200 in constant 2011 U.S. dollars. Meanwhile, the average American is expected to be more than twice as wealthy, with a forecasted gross domestic product per capita of more than $80,500.

Militarily, the United States possesses an entire generation, arguably two, of seasoned combat veterans. Even among non-combat veterans, the U.S. military’s pipeline for training technically skilled warfighters across an array of specialties continues to be the envy of nations the world over, including China. And while health care costs in the United States are exorbitant and continue to rise, this is the result of regulation-related policy choices that are not bound to America’s demographic structure, with similarly developed nations spending half as much per capita. In other words, structural advantages tell us that the United States is likely to stick around at the top of the global pecking order as China is on its way back down.

While power transitions in and of themselves are contentious business, one can imagine the added drama injected by the Chinese Communist Party as it strives to maintain power — both internally and on the world stage — wary of seeing China return to its much lamented 19th century status as “the sick man of Asia.” To be sure, even as the nation declines, Chinese leaders will have extensive material capabilities and a vast network of relational influence at their disposal should a power struggle ensue. As President Vladimir Putin’s Russia has illustrated from the Donbass to the Democratic National Committee, declining material powers can still wreak havoc in the international system and stymie U.S. strategists’ goals. Thus, none of this is to say that China’s decline will be uniform across all fronts material and relational. Rather, China’s decline in the material sense may embolden its leaders to strive to achieve its foreign policy objectives by aggressively employing other means (again, see Putin’s Russia), possibly leading to miscalculations and misperceptions that war between a materially-declining China and a relatively materially-steady United States is somehow inevitable.

As Great Britain illustrated at the turn of the 20th century, blood-free great power transitions can in part be assured by the declining hegemon tactfully ceding leadership to its aspiring successor. As China rises, the United States can do the same. While China can choose to cede its eventual leadership as well, will it? The rapidity of the transition between China’s swift growth and subsequent atrophy is virtually unprecedented for a major peacetime power, leaving strategists pondering this question in uncharted waters.

Still, long-term strategy requires thinking about such questions now, as whatever set of answers strategists devise will likely require the establishment or strengthening of relational influence via resilient bilateral and multilateral economic and diplomatic ties, or perhaps a continued U.S. military build-up “like we never have before” to correct for the United States’ presently weakening hand. Specific economic policy options include rejoining the Trans-Pacific Partnership — a move which a few remaining members of the renamed Comprehensive and Progressive Agreement for Trans-Pacific Partnership have actively encouraged but admittedly faces immense hurdles at this point in time — and embracing rather than further weakening the World Trade Organization. Both would bake-in structural economic advantages for the United States relative to China in the Indo-Pacific and the world more generally, with the former coming with the added benefit of signaling continued U.S. strategic interest in the region. On the military front, the United States would be wise to continue to further deepen ties with India and encourage a transition from Russian to American weapons systems, moves that would help de-conflict the United States’ and a rising India’s foreign policy interests (thus avoiding dual power struggles with one current and another rising power in the Indo-Pacific). Given that these and similar policy options require sustained execution, they would also greatly benefit from codification in future U.S. national security strategy documents by sending signals to both internal and external actors of their continued importance.

Perhaps more boldly, strategists could work to convince policymakers that that the U.S. Department of Defense’s desire for three to five percent real growth in its budget through 2023 would in fact likely be counterproductive in the long-term struggle between U.S. and Chinese hegemony. This does not mean that the U.S. military should cease investing in emerging technologies or attempting to retain its competitive edge. Rather, it simply means that U.S. policymakers must balance these priorities with other concerns that could erode America’s structural advantages relative to China, such as the need for sustained inward migration in the United States to avoid an aging crisis, and pension reform to sustainably manage the aging that will occur, avoiding Social Security’s possible insolvency by 2035. Likewise, policymakers might be urged to increase rather than cut foreign aid, which would enhance developing nations’ stability and decrease their dependence on Chinese investments. The great deal of political and real capital necessary to achieve these goals could require redirecting the increases currently being requested by Department of Defense officials, but these reforms’ long-term impact would underwrite American power in ways that are unlikely to risk becoming obsolete.

More generally, U.S. strategists should adopt what B. H. Liddell Hart coined an “actively conservative” mindset. Neither a strategy emphasizing military dominance nor complacency nor appeasement, an actively conservative foreign policy appreciates that preparation for conflict is necessary while also recognizing that self-exhaustion — perhaps through unsustainable increases in military spending or failure to address other pending fiscal crises — is as potent an enemy as any external foe. Furthermore, in dealing with external foes, active conservatism requires suppressing the “immoderate desire for the immediate satisfaction of outright victory.” In other words, it is taking the long view.

China’s rise is, at this point, glaringly apparent. The discernible future suggests that the same is true of China’s subsequent decline. Preparation for this reality must begin now so tomorrow’s strategists may reap the benefits that strategists managing China’s rise lack today.

Collin Meisel is a research associate at the Frederick S. Pardee Center for International Futures and a veteran of the U.S. Air Force. At Pardee, Collin works with the Diplometrics team to analyze international relations and build long-term bilateral forecasts for topics such as trade, migration, and international governmental organization membership. Follow him on Twitter @CollinMeisel.

Jonathan D. Moyer is assistant professor at the Josef Korbel School of International Studies at the University of Denver and director of the Frederick S. Pardee Center for International Futures. For the last 14 years, Jonathan has used long-term, integrated policy analysis and forecasting methods to inform the strategic planning efforts of governments, international organizations, and corporations around the world, including sponsors such as USAID, the African Union’s New Partnership for Africa’s Development, and the UN Development Programme. Follow him on Twitter @MoyerJonathan.

Image: Department of Defense photo by U.S. Air Force Staff Sgt. D. Myles Cullen

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