China Is a Paper Dragon

China Is a Paper Dragon. By David Frum.

As Biden said to the nation from the well of the House of Representatives, the authoritarian President Xi Jinping is “deadly earnest” about China “becoming the most significant, consequential nation in the world. He and others—autocrats—think that democracy can’t compete in the 21st century with autocracies.”

So this might be a useful moment to hear a contrary voice. In 2018, the Tufts University professor Michael Beckley published a richly detailed study of Chinese military and economic weaknesses. The book is titled Unrivaled: Why America Will Remain the World’s Sole Superpower.

The book argues that China’s economic, financial, technological, and military strength is hugely exaggerated by crude and inaccurate statistics. Meanwhile, U.S. advantages are persistently underestimated.

The claim that China will “overtake” the U.S. in any meaningful way is polemical and wrong — and wrong in ways that may mislead Americans into serious self-harming mistakes.

Above all, Beckley pleads with readers not to focus on the headline numbers of gross domestic product. China may well surpass the United States as the largest economy on Earth by the 2030s. China was also almost certainly the largest economy on Earth in the 1830s. A big GDP did not make China a superpower then — and it will not make China a superpower now, or so Beckley contends. …

Beckley is a voracious reader of specialist Chinese military journals and economic reports. And, he argues, many of the advances cited as Chinese strengths don’t hold up to close scrutiny. …

Worried about Chinese students’ high scores on comparative math tests? You’re looking at the curated outputs of highly selective groups of students.

Whereas public school is free through high school in the United States, China’s government only covers the costs of elementary and middle school. At many Chinese high schools, families have to pay tuition and other expenses, and these outlays are among the highest in the world. Consequently, 76 percent of China’s working-age population has not completed high school.

Things don’t improve at the college level.

Many Chinese college students describe their universities as “diploma factories,” where student-teacher ratios are double the average in U.S. universities, cheating is rampant, students spend a quarter of their time studying “Mao Zedong thought,” and students and professors are denied access to basic sources of information, such as Google Scholar and certain academic journal repositories.

Surely China is winning the industries of the future? Not really.

Chinese firms’ total spending on R&D as a percentage of sales revenue stalled at levels four times below the average for American firms. … Chinese firms remain dependent on foreign technologies and manual labor and have a rudimentary level of automation and digitization: on average Chinese enterprises have just nineteen robots per ten thousand employees; U.S. firms, by contrast, use an average of 176 robots per ten thousand employees.

But isn’t China sprinting to overtake the United States? Yes, but it’s stumbling badly in that pursuit.

China now leads the world in retractions of scientific studies due to fraud; one-third of Chinese scientists have admitted to plagiarizing or falsifying results (versus 2 percent of U.S. scientists); and two-thirds of China’s R&D spending has been lost to corruption.

Undergirding these examples and dozens more like them is Beckley’s clarifying theoretical insight: Repression is expensive.

Comparing China’s military spending to that of the United States, for example, doesn’t make much sense. The Chinese military’s first and paramount mission is preserving the power of the Chinese Communist Party against China’s own people. The U.S. military can focus entirely on external threats. …

Beckley dramatizes this point with historical context. The concept of GDP did not exist in the 19th century, but economists have retrospectively reconstructed those figures backward into time. They have found that in the 1800s, the Chinese empire had a GDP much larger than that of Great Britain. The Chinese army of 800,000 men also enormously exceeded Britain’s troop numbers. Yet when the two states clashed in the two Opium Wars, from 1839 to 1842 and again in 1858, China was crushingly defeated. Why?

A great part of the answer, then as now, was the cost of repression.

Nineteenth-century China faced an average of 25 local uprisings a year. Most of its troops had to be deployed to suppress rebellions and control banditry, leaving few available for war-fighting. …

I spoke with Beckley shortly before Biden’s address to ask whether he had revisited any of his assessments since finishing his book early in Donald Trump’s presidency. He said that he had become more alarmed by China’s aggressive and repressive intentions, but remained as dubious as ever about Chinese capacities. …

[We need] to appreciate the tremendous capabilities of this country, and the very real limits besetting China: a fast-aging population, massive internal indebtedness, and a regime whose worsening repression suggests its declining popularity. …. It’s about to be home to a lot of old people, and trust in the state is very low, and for good reason. …

China misallocates capital on a massive scale. More than a fifth of China’s housing stock is empty — the detritus of a frenzied construction boom that built too many apartments in the wrong places. China overcapitalizes at home because Chinese investors are prohibited from doing what they most want to do: get their money out of China. Strict and complex foreign-exchange controls block the flow of capital.

More than one-third of the richest Chinese would emigrate if they could, according to research by one of the country’s leading wealth-management firms. The next best alternative: sending their children out. Pre-pandemic, almost 1 million young Chinese attended Western universities. Pre-pandemic, only about 10,000 Americans were studying in China; single thousands were from other Western countries — and almost all of them were in the country to study language, not any academic specialty.

Hope he’s right.

After the Soviet Union dissolved, it was found that the West had been systemically overestimating Soviet strength and capabilities. In some cases, like the CIA and US military, it was a self-serving bias that led to higher budgets.

hat-tip Stephen Neil