China’s other challengesAnd it isn’t only China’s economy that has been overestimated.While Beijing has put in considerable effort building its soft power and sending its leadership around the world, China enjoys fewer friends than one might expect, even with its willing trade partners. North Korea, Pakistan, Cambodia and Russia may count China as an important ally, but these relationships are not, I would argue, nearly as strong as those enjoyed by the United States globally. Even in the Asia-Pacific region, there is a strong argument to say Washington enjoys greater sway, considering the especially close ties with allies Japan, South Korea and Australia.Even though Chinese citizens report broad support for the Communist Party, Beijing’s capricious COVID-19 policies paired with an unwillingness to use foreign-made vaccines have dented perceptions of government effectiveness.Further, China’s population is ageing and unbalanced. In 2016, the country of 1.4 billion saw about 18 million births; in 2023, that number dropped to about 9 million. This alarming fall is not only in line with trends towards a shrinking working-age population but also perhaps indicative of pessimism among Chinese citizens about the country’s future.And at times, the actions of the Chinese government read like an implicit admission that the domestic situation is not all that rosy. For example, I take it as a sign of concern over the systemic risk that China detained a million or more people, as has happened with the Muslim minority in Xinjiang province. Similarly, China’s policing of its internet suggests concerns over collective action by its citizens.The sweeping anti-corruption campaign Beijing has embarked on, purges of the country’s military and the disappearance of leading business figures all hint at a government seeking to manage significant risk.I hear many stories from contacts in China about people with money or influence hedging their bets by establishing a foothold outside the country. This aligns with research that has shown that in recent years, on average, as much money leaves China via “irregular means” as for foreign direct investment.
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