Very rapid economic growth is not uncommon in modern history.  It runs with Industrialization.  The key lies in shifting huge numbers of people out of a low-productivity agricultural sector into a high-productivity industrial sector.  Generally low industrial wages are often better than in agriculture, so workers are relatively tranquil for a long time.  Low wages plus technology produce lots of goods for sale at a low price.  Manufactured goods are then sold in large numbers both on domestic and international markets. 

Generally, this rapid growth doesn’t last forever: the population shift runs out of peasants; labor starts to demand better conditions, leading to pressure for unionization; foreign later entrants to industrialization follow the same path and under-cut the leaders’ initial cost advantage; the economy moves into “higher” stages that require more educated people; and a complex economy is more difficult to manage.[1] 

            China offers a text-book case of this process.  In less than half a century, China moved from relying on a very inefficient peasant agriculture to become the second largest economy in the world, with a gigantic industrial sector that produces a lot more than just cheap textiles.  Growth made other things possible: the pacification of domestic conflicts; the build-up of great financial and military power; and the preservation of one-party rule.  Now, some observers are beginning to ask if the era of rapid growth has come to an end and, if so, what may follow.[2] 

            Four big issues confront contemporary China.  First, China has an aging population and no hope of immigration.  Where is it going to find workers and how will it support a non-working population?  Second, there is a widening gap between the old-industrial areas of the northeast and the much more dynamic areas of Shenzhen and Shanghai.  Is China’s “Rust Belt” going to be subsidized by other areas or is it going to be treated as a new labor and resource swamp that has to be drained?  Third, other countries have become alarmed at Chinese power and assertiveness.  The United States has imposed tariffs and is imposing restrictions on exports of sensitive technologies.  Fourth, it is much easier to centrally control a simple economy than a complex economy.[3]  Zi Jinping has committed the country to tightening central control. 

            These problems may create opportunities and problems for the United States.  Zi may tighten his grip on power and hold to his present course, or a powerful faction may arise in the Party to force a return to the policies of Deng Xiaoping.  China may reallocate resources from its military to dealing with its internal problems, or it may believe that enough guns can deal with the problem of not enough butter.  A slowing Chinese economy may reduce both China’s power over neighboring economies and the fears that run with it.  Or a return to sustained international economic growth may allow China to continue its current policies. 

            All this is uncertain.  Two things are certain.  First, bad and dangerous as he is in American eyes, Zi Jinping possesses great determination and political skill.  It isn’t impossible for him to master a tough situation. 

            Second, the current United States is no model of political health or good governance.  Whatever China’s future, Americans need to start setting their own house in order.  Soon. 

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[1] David S. Landes, The Unbound Prometheus (1969). 

[2] Walter Russell Mead, “China’s Economy Hits the Skids,” WSJ, 18 July 2023. 

[3] See: The Soviet Union.