By Antonio Graceffo
At the 19th Chinese Communist Party (CCP) National Congress in 2017, Chinese President Xi Jinping (習近平) unveiled his vision to transform China into a “great modern socialist country” by 2049, with the goal of becoming a global leader in terms of comprehensive national strength and international influence. This ambition includes Beijing’s aspirations to excel in the realms of economy, military power, technology and diplomatic influence by 2049.
However, achieving this objective hinges on China’s capacity to maintain its economic growth. The nation is experiencing an economic slowdown and grappling with enduring structural challenges, making it increasingly unlikely that it would attain its objective.
Beijing claims success in the economic realm for having created a “moderately prosperous society.” However, China still lags far behind the US. China is the world’s second-largest economy, with a GDP of about US$18 trillion, compared with the US’ more than $25 trillion. To meet its 2049 goals, China needs continued economic growth. This growth, however, would be slow in coming.
The Chinese economy is stalling, faced with short-to-medium-term problems including falling exports and factory activity, a declining currency value, rising youth unemployment, suppressed consumption, a real-estate sector crisis and mounting financial sector risk.
These nearer-term challenges are rooted in underlying structural issues, including an aging population, massive debt, growing social and commercial controls, and an aggressive foreign policy that discourages foreign investment.
It is becoming more difficult for Xi to make good on his promise of economic prosperity its citizenry. At the same time, less money would be available to fund the 2049 goals.
China ranks third in military firepower, behind the US and Russia. To surpass the US militarily, China would have to increase its defense spending. For this year, the US has budgeted US$816.7 billion for defense, while China has budgeted US$224.79 billion. US defense spending is so large that it is greater than the next 10 countries combined.
The goals of military supremacy and scientific and technological dominance are closely related, because the modernization of the Chinese People’s Liberation Army (PLA) is dependent on Beijing developing or acquiring advanced technology. As per the “2022 China Military Power Report” released by the US Department of Defense, China’s objectives for modernizing the PLA encompass the enhancement of nuclear capabilities, space exploration and counterspace capabilities.
In 2021, the PLA initiated discussions on a new operational concept known as “Multi-Domain Precision Warfare.” This comprehensive approach integrates elements such as command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR) networks to pinpoint vulnerabilities in adversaries’ systems and execute precise strikes against these weaknesses. All of this requires very expensive and advanced technology.
A ranking of the World’s Most Technologically Advanced Countries puts the US in second place, while China is 38th. On the AD Scientific Index, the US was first and China seventh, based on the number of prominent scientists emerging from each nation. To catch up, China would have to outspend the US in research and development (R&D), as well as talent acquisition. Last year, the US allocated US$668.4 billion for R&D, while China invested US$525.7 billion.
A country’s diplomatic or international influence can be measured across five attributes: military alliances, international alliances, political influence, economic influence and leadership. Using this framework, the US ranks first, China second and Russia third.
To expand its influence, China has launched several initiatives and groupings, such as the Belt and Road Initiative, the Shanghai Cooperation Organization and BRICS Plus. These diplomatic relationships are largely predicated on promises of Chinese trade and investment, as well as soft loans from China-backed development banks, such as the Asian Infrastructure Investment Bank or the New Development Bank.
Short of cash, China would be in less of a position, moving forward, to underwrite other countries.
Xi’s intensification of CCP control over the economy and society, combined with a lack of opportunity, is hampering entrepreneurship while encouraging capital and talent to leave.
Young and capable people are exiting the country in increasing numbers, while the country is beginning to see net cash-outflows and capital flight. Foreign direct investment (FDI) is at a 25-year low, owing to decreased expectations of positive returns and increased aggression toward foreign countries. Expanding internal security regulations such as the Counter-espionage Law has increased the risk of arbitrary detention.
FDI is directly linked to exports, which make up more than 20 percent of China’s GDP. When FDI decreases, so do exports, as foreign-invested companies are responsible for more than 30 percent of exports. Additionally, with diminishing FDI, there are fewer joint ventures and reduced technology transfer, impeding the achievement of China’s technology dream.
The single issue which makes China’s success least likely is the economy, and economic derailment is already under way. The structural issues of the aging crisis, massive debt and misguided government policies will have to be corrected before other issues such as growing youth unemployment, declining exports and falling FDI can be dealt with.
Until these problems are settled, China cannot achieve its 2049 goals. Consequently, the most likely scenario is that the Chinese economy would continue to slow and the 2049 goals would have to be put off for some time in a more distant future.
This article originally appeared in The Taipei Times on Wed, Sep 13, 2023
