Has China Peaked Already?

China has studied every great power’s rise — but did it miss the class about decline?

Shanghai. (Ashley Guo for Noema Magazine)
Credits

Parag Khanna is the founder and managing partner of FutureMap, a data and scenario-based strategic advisory firm. His latest book is “The Future is Asian: Commerce, Conflict and Culture in the 21st Century.”

SINGAPORE — In November 2006, the Chinese public was held rapt by a 12-part documentary series titled “The Rise of the Great Powers.” Curated by a team of respected Chinese historians, each episode revealed the pathways major empires took to reach the zenith of their global influence, including the United Kingdom, Japan, Russia and the United States. At the time, China was viewed — both at home and abroad — as Asia’s central force and a future superpower, but not the main geopolitical story — especially as the U.S. was in full “hyper-power” mode, deep into its indefinite occupation of Iraq and Afghanistan. This was all the more reason for the Chinese to sit back and cautiously study how nations could become so powerful as to extend their might all across the planet. 

“The Rise of the Great Powers” achieved its central objective: to socialize and legitimize the notion that it was China’s turn to rise into the pantheon of history’s superpowers. And China has clearly followed the documentary’s lessons to a tee: practice import substitution, force technology transfer, amass currency reserves, hoard precious metals, deploy merchant fleets, lend prodigiously, install infrastructure far and wide, build a powerful military, protect your supply chains, buy off elites in colonies and client states, and so forth. If world history were a game of Risk, then every century, the board is reset and another player gets its turn to rule the world. The scale is finally weighted in China’s favor. 

Or maybe not. If history really did repeat itself, we’d marvel at our own predictability. But this time could also be very different. We have amassed enough history to preventively alter the course history seems to be taking us on. It is said that Westerners reason in linear terms and Easterners in circular concepts. Neither though seems to grasp complexity, in which every collision of forces, every action and reaction, produces fractal outcomes that recirculate and ripple through the system. What if, rather than confidently repeating the past, China is mistakenly repeating the present?

CCTV unfortunately never produced a sequel on imperial decline: the ideological rigidity and strategic blunders that corrupted, subverted and undermined the success of empires. But even without a formal curriculum on imperial overstretch and hubris, Chinese TV has beamed home blow by blow America’s past two decades of international flailing and domestic decay. Yet convinced it can do no wrong, China’s decline may have begun before its rise is complete. America has quickly fallen from its hyper-power apex. China may well never reach it.

“Convinced it can do no wrong, China’s decline may have begun before its rise is complete.”

It seems premature to speak of “peak China” when the country is still going from strength to strength. Growth has slowed, but in the wake of COVID-19, it is the only economy growing at all. It is rapidly aging, but still has more youth than Europe has people, while robots churn out enough goods for itself and the world. Its domestic debt has skyrocketed, but it still has enormous reserves, is opening its capital account and deploying a global cryptocurrency. But the sense in which to use “peak” is akin to “peak oil” or “peak America”: relative, not absolute. Proponents of “peak oil” missed the reality of vast additional global reserves as well as the phenomenal rise of alternative and renewable energy. Because we have reached peak oil demand, supply has become irrelevant.

Similarly, despite foreign policy blunders and irrespective of the November 2020 election, America will remain the world’s preeminent power long into the future. Its economy is gargantuan, and it controls the world’s only reliable reserve currency. Its military has global reach and can reinforce allies across the globe, and North America is the only truly conflict-free continent. Yet as with oil, the demand for American leadership has peaked. Countries choose their service providers for military assistance, financing, technology and other utilities from a global marketplace of suitors and vendors. 

Until recently, most Americans thought the world wanted to be like them. By now, they probably know better. In recent years, the Chinese have been telling themselves similar things, given the country’s internal dynamism and external activism in building a new layer of global infrastructure through its Belt and Road Initiative. But much as America has abused its privileged status by cajoling allies toward policies counter to their own interests and imposing wanton sanctions that inhibit meaningful progress in rehabilitating pariah states such as Iran and North Korea, China has very quickly crossed the line from receiving fraternal goodwill to permanent suspicion.

From the Himalayas to the South China Sea, its aggressive pursuit of micro-territories has ensured that more than three billion Asians may never trust it again. Arabs, Africans and Latin Americans are trimming their exposure to Chinese debt and projects. For its part, the European Union has just declared China a “systemic rival.” China has been so busy winning battles that it doesn’t realize it may already have lost the war. 

“Countries choose their service providers for military assistance, financing, technology and other utilities from a global marketplace of suitors and vendors.”

Both America and China have also overestimated their technological superiority. The U.S. has conflated invention with innovation, overlooking how rapidly technologies spread and are adapted to foreign markets by rival governments and their firms. The Internet and gene sequencing were pioneered in the U.S., but Japan, China and others have delivered the fastest bandwidth and gene therapies to their citizens. The same goes for 5G and quantum computing.

China too has mistaken market prowess for monopoly. But the coordinated ejection of Huawei from critical infrastructure networks — and efforts such as the Resilient Supply Chain Initiative to boost the industrial capacity of countries such as Japan, Australia, India and others in semiconductors, pharmaceuticals, rare earth minerals and automobile parts — demonstrate how quickly dominance can be eroded. Why go with Chinese companies that harvest your data when U.S.-backed Indian firms offer AI-as-a-service is a third-party provision of big data analysis, machine learning and other statistical tools to clients without the need for large self-directed investment., with no strings attached? The most inevitable force in history is not imperial cycles but technological diffusion.   

In the same vein, today’s world is far more characterized by geopolitical entropy than concentration. Europe has emerged as an independent pole of financial, diplomatic and regulatory authority. Far from despondently accepting junior status in a U.S.-China bipolar “new Cold War,” it is increasingly going its own way in dealing with Russia and Iran. The “EU-Asia Connectivity Initiative” is a far more sensible approach to Eurasian engagement than anything the U.S. has come up with, and European trade and investment ties with Asia could soon be double America’s. 

Dynamics within Asia itself are also hastily bringing an end to China’s version of America’s “unipolar moment.” Japan has mounted a strategic revival, and India is confidently parrying Chinese maneuvers in multiple Himalayan theaters; even a neo-Ming armada of “treasure fleets” will never control the Indian Ocean. Together with the U.S. and Australia, these Indo-Pacific powers have formed a strategic “Quad” to fortify the defenses of China’s weaker neighbors to limit Chinese expansionism. Today’s weak states aspire to sovereignty and self-actualization, not neo-mercantile subservience, and strong lifelines have emerged to ensure they remain on the former path rather than succumbing to the latter.  

“Today’s world is far more characterized by geopolitical entropy than concentration.”

Entropy is inherent in complex systems: Power inexorably diffuses. Never before have we had such a global distribution of power: The 21st century is the first time in human history that every continent or region represents independent poles of power in their own right. This complex global system is far greater than any single power: Within its webs of relationships, no power can impose itself on the world without counter-coalitions forming. There are limits to power, but no end to entropy. 

Demographics and psychology are also significant variables nudging us toward a non-cyclical tangent for the future. Since 1945, the global population has more than tripled and the number of states recognized by the U.N. has nearly quadrupled to 193. The vast majority of the human population lives in post-colonial countries with unhappy memories of both colonialism and the Cold War; they do not wish for history to repeat itself — and will not let it. The backlash against China that has materialized in just the past three years would have taken decades, centuries ago. The 2020s will provide a rude awakening from the “Chinese Dream” of the 2010s.

All of this suggests that today’s conventional wisdom — by which either the U.S. restores its primacy or China displaces it while the rest of the world is forced to choose sides in a new Cold War — represents a fairly spectacular failure of imagination. Nonetheless, our recent intellectual shortcomings can be instructive in teaching lessons in the emerging dynamics of world politics. An older and increasingly out-of-date scholarly tradition takes comfort in simplicity, with theoretical parsimony masquerading as rigor.

Not only have Western academics been seduced by their historical models but ironically, so too were the Chinese. After all, from Beijing’s perspective, what is not to like about Western authorities telling you it is your turn to rule the world? The media has been all too eager to embrace the “Thucydides Trap,” as if Graham Allison’s great book “Destined for War: Can America and China Escape Thucydides’ Trap?” did not contain a question mark in the subtitle. 

“The 21st century is the first time in human history that every continent or region represents independent poles of power in their own right.”

What has actually transpired, however, embodies the rapid feedback loops inherent in a complex global system: Hyping the China threat has inspired myriad responses to that threat, shifting geopolitics along new vectors. A similar phenomenon has been underway with respect to the global population: Fears that the world population would reach fifteen billion and plunge the world into Malthusian anarchy evoked widespread measures to control rampant population growth. Current estimates suggest the human population will reach about 10 billion people in 2050.

There is a tempting objection to this drift from fatalism: It’s all priced in already. Like Christopher Nolan’s film “Tenet” or Alex Garland’s slightly more comprehensible miniseries “Devs,” asserting free will is an element of the dramatic apotheosis, but merely a distraction from the master plot we cannot escape (think of the final elevator scene in “Devs” or the cat-and-mouse between Kenneth Branagh’s Andrei and John David Washington’s Protagonist in “Tenet”). In sci-fi at least, the future communicates with the present, providing a stark incentive to act on its message. In real life, we maintain the illusion of control and consign the worst-case scenario to a corner of our mind. 

The pandemic has been a tragic reminder of this default mental state: All the foresight in the world meant very little when it struck. While scientists warned of its exponential global spread, militias occupied state capitol buildings demanding an end to lockdowns they never took seriously in the first place. With no institutional memory of past pandemics, most Western societies failed to heed the simple lesson of the 1918 Spanish flu: Stay at home and wear a mask. Similarly, the Transition Integrity Project ran scenarios of disputed U.S. election outcomes so that steps could be taken to prevent chaos, but ideological division and our incapacity for collective action all but ensure that one of those scenarios will come to pass anyway. 

Isn’t it just the same with geopolitical cycles of cataclysmic wars? We may claim to have the foresight to advise China to accept realities America ignored prior to provoking wars that will similarly erode its hard-won ascent — but what if China actually wants these wars as part of its master plan? Indeed, another worrying example from the present: The Trump administration’s overt upgrading of diplomatic and military ties with Taiwan — combined with sanctions banning the Taiwan Semiconductor Manufacturing Company from selling semiconductors to China — are meant to disentangle allied countries’ supply chains from the Chinese mainland, yet they could very well be accelerating China’s plans to invade Taiwan and physically capture the production of these critical components. A strategy designed to cripple China’s high-tech industries would perversely enhance them, boosting China’s ability to dominate the battlespace.           

“The backlash against China that has materialized in just the past three years would have taken decades, centuries ago.”

Still, even if China has thought two steps ahead, has it thought three or four? I have my doubts. China is nimble but not omniscient. It could have averted the present (and future) pushback to its ambitions through a more “peaceful rise,” but President Xi Jinping’s nationalism hijacked the country instead. An inescapable pivot in history’s master plot? Perhaps. But China would not be the first power to confuse its momentum for longevity. Both nationalism and triumphalism indicate a high likelihood of conflict — but not that its aftermath will necessarily favor China.

The present needs more voices from the future. Absent the “temporal pincer movements” of “Tenet,” we must constantly run scenarios and derive pathways to avoid the worst outcomes. In the 1983 hit film WarGames, the War Operation Plan Response simulator cycles through every possible nuclear war scenario and upon realizing they all end in stalemate, famously utters: “A strange game.: the only winning move is not to play.” If history is a pre-programmed algorithm, our only hope is a collective will to maintain a self-regulating autopoiesis. We have a dangerous amount still in common with our forefathers: pride, fear and greed. But what is different should matter more: deterrence, sovereignty, a common climate threat and more. It’s time to whistle a different tune.