Commentary on Political Economy

Friday 2 July 2021


China Isn’t That Strategic

Actors practice commemoration ceremonies in front of Beijing's Forbidden City.
Lintao Zhang / Getty

The oft-repeated compliment paid to China’s leaders is that they “play the long game.” Masters of strategic thinking, the narrative goes, Beijing’s top cadres are always looking far ahead—planning, preparing, and plotting for the future. If only American politicians and businessmen could see past the next election cycle or quarterly earnings report, the Chinese wouldn’t be eating our lunch.

But then there’s the curious case of China’s impending demographic disaster: The country is getting old, and quickly, which is threatening its economic progress. The problem is nothing new. Experts have been ringing the alarm for years.

You’d expect Beijing’s officious planners to tackle this challenge the same way that they build high-speed railways or squash COVID-19 outbreaks—with the full zeal and heft of the state. Not this time. Like a deer caught in the headlights, the Communist Party has seemed paralyzed, unable to mount a response even as the aging express train runs it over.

Its latest attempt to address the issue, announced in May, was to lift the ceiling on the number of children each couple is permitted to have, from two to three. The measure was met with a collective yawn from analysts, who predict it will have little effect.

“Demographics is probably representative of one area of social policy in which [Beijing’s leaders] are still trying to put forth the oldest possible ideas and thinking,” Mei Fong, the author of One Child: The Story of China’s Most Radical Experiment, told me.

The Chinese government’s botched population policy is more than just an outlier, or a nuancing of a broader narrative: It tells us about how the Communist Party governs and exposes weaknesses that not only counter its reputation for strategic genius but also imperil China’s climb to global greatness. Like any political organization, China’s Communists can be consumed by short-term priorities or trapped in bureaucratic entanglements, leading to decisions that sacrifice long-term benefits to immediate interests.

The Chinese government earned its reputation for competency and foresight from its expert management of China’s economy. With its five-year plans, crammed with impressive targets and lofty ambitions, the country’s leadership can appear one step ahead of the rest of the world. This can produce real-life advantages: President Joe Biden is just now trying to get the U.S. caught up to China in electric vehicles, a crucial future industry that a far-sighted Beijing has been subsidizing for years. The Communist Party certainly thinks very highly of itself. Ahead of events to mark today’s 100th anniversary of its founding, the party has released a torrent of propaganda touting its achievements and charms.

China can just as readily lose sight of the horizon, though. Its cadres may not face elections, but they do need to justify their regime, especially as it becomes more oppressive. Proving their right to rule, pandering to the public, or maintaining social stability can all get in the way of long-term planning.

For instance, economists have been warning that China is too reliant on investments in infrastructure, apartment blocks, and factories to sustain growth. The resulting debt and waste harm the economy’s progress, but the Communist Party, fixated on meeting elevated growth targets, has moved slowly on reform. In other cases, political leaders can’t break from entrenched practices that have clearly outlived their usefulness. Policy makers still maintain a system of household registration, called the hukou, that tethers people to their hometowns for basic services, even though it holds back both family welfare for the country’s mobile workforce and economic performance for the nation as a whole.

If anything, the current administration may be less capable of creative or common-sense policy making than its predecessors. Party boss Xi Jinping has concentrated power to a degree unseen since the days of Mao Zedong. Major decisions cannot get made without his personal attention, and can be based on his whims.

“The finely tuned technocratic motors of the Chinese state—they are grinding down,” Carl Minzner, a specialist in Chinese government at Fordham University School of Law, told me.

The population problem is probably the most damaging example of policy paralysis. Results from the latest census, released in May, revealed the severity of the situation. Population growth over the previous decade was the slowest on record, while the proportion of people age 60 or older rose to nearly a fifth of the populace. Things aren’t likely to get better from here. Projections vary, but they all point in one worrisome direction: an older nation. The size of the 65-and-over set will likely double over the next two decades as the workforce shrinks, making China a “super-aged society.” A Chinese-government commission has estimated that the elderly would account for about one-third of the country’s population by 2050.

It may seem puzzling that the world’s most populous nation, with 1.4 billion people, needs more people. But in an aging society, a larger number of elderly, less productive people who are more reliant on health care and pensions need to be supported by a proportionally smaller group of productive youngsters. The burden that mismatch creates—for families, the government, and the economy—can weigh on growth. The research firm Capital Economics, in a February study, cited aging as a key reason China may fail to overtake the U.S. as the world’s No.1 economy by 2050. The demographic drag will be so severe, Mark Williams, the firm’s chief Asia economist, told me, that he thinks China’s economy will likely never surpass America’s.

Ironically, maximizing economic benefits motivated Chinese leaders to restrict population growth in the first place. The fewer newborns, the faster the nation could be lifted out of poverty. The effort dates back a half century to a 1970s campaign that pressured couples to get married later, wait longer between children, and have fewer of them. The more stringent “one-child policy,” which limited most couples to having a single baby, was introduced in 1979, at the start of the country’s capitalist reforms.

Gauging the impact of the one-child policy is no easy task. China’s birth rate would have declined over time even without the restriction, which is often the effect of greater wealth and urbanization. But the policy almost certainly accelerated the aging of Chinese society. The social costs are not in doubt: Tens of millions of single children face caring for elderly parents with little support. The policy badly skewed China’s balance of the sexes too. Many female infants were abandoned, or worse. The country’s male population now outnumbers females by as many as 40 million.

Then there are the incalculable losses—the sorrow of truncated lineages, the scars from abortions, sterilizations, and other abuses suffered at the behest of government enforcers. The officials “planned population as they planned goods,” as one 2018 assessment put it.

As far back as 2004, local experts began lobbying the leadership to ease up. But almost another decade passed before the government started phasing out the one-child policy, and it wasn’t entirely eliminated until 2016, when couples were allowed two children.

That hardly packed maternity wards. The number of newborns Chinese people brought into the world in 2020 plunged to 12 million, the lowest since 1961, when the country was engulfed by famine following the disastrous Great Leap Forward. Not even such a pathetic showing, however, has convinced Beijing to do what seems glaringly obvious: lift restrictions on births entirely.

Fordham’s Minzner blames bureaucratic inertia. A sprawling state apparatus geared toward controlling births emerged from the one-child policy. Local officials were judged by their success in implementing the program. This system, and the incentives that made it work, became embedded in the government’s structure.

Nor, in the eyes of officials, have caps on births lost their usefulness. The Chinese government still wishes to constrain segments of the populace—most of all, minorities. Alarmed by higher birth rates among Muslim Uyghurs in the far-west region of Xinjiang, authorities have forced birth control, sterilization, and abortions onto Uyghur women on a sweeping scale.

“Chinese authorities also have a strong interest in maintaining population control,” Minzner said. “Fully lifting population controls across the board calls into question why you have controls on minorities.”

In some respects, the roots of resistance run even deeper, into the heart of Communist rule. The party sells itself to the public as infallible: Keep quiet and stay out of politics, it promises, and the party will provide. That makes admitting failure politically uncomfortable for the Communist leadership. This is especially the case with the one-child policy, which had been so central to its program, and so intrusive to the personal lives of Chinese families. To confess now, after all that’s happened, that the policy was wrong is too great a political risk.

“Legitimacy … must be in Xi Jinping’s mind,” Wang Feng, a sociologist at UC Irvine, told me. This is why, Wang explained, the government is trying to masquerade what is clearly a retreat as a shift of direction. “It is really not about giving up a policy; it is about implementing a new policy,” he said. “They want to say that they are in the driver’s seat.”

The government has been signaling that it may become more proactive in promoting having babies. Premier Li Keqiang, at this year’s legislative assembly, mentioned China needed an “appropriate” level of births, while the latest five-year plan sets a goal of greatly increasing day-care facilities for infants. Such measures may help, but likely only at the margins. The demographic decline China is experiencing may simply be beyond fixing. The problem “is so massive, and they are so late to this game,” Wang said.

Yet we can’t dismiss the possibility that the Communist Party will completely reverse course. For the past five decades, Beijing utilized its repressive machinery to suppress births; it could try to use that same machine to increase them. That new mission, though, could be significantly more difficult. “It is much easier to control and prevent births,” said Fong, the One Child author. “You can’t make people have children.”

Or can you? The Chinese state has tremendous (and terrifying) power to control the populace. To compel couples to have more babies, officials could reintroduce some of the tools used to enforce the one-child policy, such as stiff fines, and employ them with new technology. The social credit system, a method of scoring people based on their behavior, could link child-rearing to bank loans or plumb jobs.

This may sound outrageous at first. But the Communist Party, still desperate to legitimize itself by meeting economic targets, fixated on control and locked into outdated thinking, could once again head down a dangerous course, motivated not by long-term strategy but by perceived political necessity. And once again, the path would be littered with abuses and individual tragedies that the party itself may come to regret.

Michael Schuman is the author of Superpower Interrupted: The Chinese History of the World and The Miracle: The Epic Story of Asia’s Quest for Wealth.

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