The Western media have done Xi a great favour: they have bestowed upon him low expectations. Many Western observers, including thoughtful ones, believe that the great China growth story is over, because China is now ruled by an incompetent and isolated leader. Xi will shatter their expectations.
But this is not just about Xi. No one person – not even Xi – is responsible for driving China’s growth. Larger structural forces are at play. For starters, China’s years of investing massively in physical infrastructure and human capital are likely to pay off in the coming decades. Yes, in a few decades, China’s demographic decline will generate headwinds. But, before that happens, the country will benefit from an explosion of talent in science and technology. Since 2019, China has been producing more research than the United States and Europe overall, and a higher percentage of its research was among the top 1% of papers by citation globally.
America’s decision to cut off chip supplies to China will be a short-term setback, but it won’t cripple China. In fact, US efforts to contain China’s rise – such as launching a trade and technology war and “needling” the country on Taiwan – have served only to reinforce a broad consensus to achieve “national rejuvenation.” China remains as determined as ever to avoid another “century of humiliation” by the West. When Xi said in his speech at the CPC Congress that China should “be ready to withstand high winds, choppy waters, and even dangerous storms,” most Chinese would have nodded in agreement.
The Regional Comprehensive Economic Partnership (RCEP) – the world’s largest free-trade agreement – will add yet more fuel to China’s economy. And the dual-circulation strategy will soon begin to pay off, not least owing to the rapid growth of China’s retail market, which has swelled from $2.3 trillion (much smaller than America’s $3.9 trillion) in 2010 to $6 trillion in 2020 (surpassing America’s $5.6 trillion). Now extrapolate that to 2030.
Short-term challenges remain, including the zero-COVID policy, the real-estate bubble, and US technology sanctions, and 2022 will be one of the Chinese economy’s worst years in recent history. But pragmatic and rational governance has been enabling China to overcome major public policy challenges for decades, and that is not going to change. China will bounce back from its current struggles.
In short, don’t bet against China and Xi. The great Chinese growth story will continue.