THE TOOTHLESS DRAGON:

China's first weakness is strongman Xi himself. Instead of selling off inefficient state-owned industries and banks, which still make up a significant portion of the Chinese economy, he is trying to recentralize power. He has done away with the improvement of Hu Jintao, his predecessor as Party leader, which set the expectation that CPP leaders would step down after two five-year terms. This was Hu's attempt to begin to modernize Communist Party governance by trying to regularize changes of leadership. Instead, Xi is trying to return China to the bad old days of succession struggles after a political strongman (now Xi) dies or is incapacitated. In addition, the private economy continuing to carry the burden of sclerotic state-owned "key" industries and banks will slow Chinese economic growth.

Also likely to slow economic growth is China's demographic crisis. As countries develop and industrialize, they have fewer children because less labor is needed in the agricultural sector and greater numbers of children raise costs to individual families. Thus, many developed countries around the world have declining birthrates. However, China's problem is much worse because of the Communist Party's disastrous "one-child policy," which was revoked only after it had exacerbated the demographic crisis.

Furthermore, China has restive ethnic inhabitants of Xinjiang and Tibet and a politically unruly pro-democracy population in Hong Kong, which China is suppressing in violation of its promise to allow a "One China, Two Systems" approach. Such fractious populations weaken China internally.

China's neighbors have complained about its more assertive behavior in the South China Sea, where it claims a ridiculous amount of the waters as its own and builds artificial islands to stretch its tenuous claims. However, as a rising power--which the United States would be wise to tolerate as long the Chinese do not threaten the United States--China should be allowed to have a sphere of influence, as most great powers throughout history have demanded for their security. Any threat China poses is primarily to surrounding regions and perhaps Taiwan. The United States should stay out of intra-Asian territorial disputes, including Taiwan, but could continue to sell weapons to all nations in the region to defend themselves against any Chinese assertiveness, using a porcupine strategy that could deter China from outright aggression.

China's military threat is mostly to such areas in its "near abroad." The U.S. security establishment has done much hand wringing about the Chinese economic "Belt and Road" initiative to win friends around the world by building infrastructure projects. However, paraphrasing Betty White, the program is really a colossal waste of Chinese time (and money), with "beneficiary" nations ensnared in debt traps for state-driven boondoggle projects that may even impair economic development. Perhaps the United States should be hoping the Chinese will continue to waste and dissipate their resources on such white elephants.

Tweet   @brothersjudd