China cannot escape the 30-year rule
Kevin Frayer/Getty Images
Chinese General Secretary and President Xi Jinping welcomes his departure after addressing a press conference with members of the new Standing Committee of the Political Bureau of the Communist Party of China and Chinese and foreign journalists at the Great Hall of the People on October 23, 2022 in Beijing, China.
Gwynne Dyer is a UK-based Canadian journalist and historian who writes on international affairs.
OPINION: Predictions are difficult, especially for the future (as Yogi Berra once said). Moreover, the “iron laws of economics” do not really exist: there are too many random variables for predictions about the economic future to be reliable.
But the 30-year rule is pretty close.
What he is saying is that economies in the process of industrialization usually have a golden period where the population is growing rapidly, a lot of cheap labor is flowing into the cities from the countryside and the economy is growing also very quickly.
However, this period lasts, on average, about three decades, and then growth falls back to the old familiar level of 2-3% per year.
It happened like that in the United Kingdom in 1850-1880, and the United States had its turn around 1885-1915. Russia (or rather the new Soviet Union) had its heyday in the 1920s and 1930s, but lost the third decade because Germany invaded in 1941.
This model is quite independent of mainstream economic ideology, as you can clearly see in the post-WWII “miracles” in East Asia. Japan in the 1950s-1980s is the extreme example: growth peaked at 12.5% per year and averaged around 5% per year until 1980.
At one time, Japan was officially considered the world’s second largest economy, and the land of the Imperial Palace Garden in central Tokyo was worth more than the entire state of California.
Then Japan’s thirty years passed, and since 1990 the Japanese economy has barely grown.
South Korea and Taiwan took the same path a little later, also experienced their three decades of high-speed growth, and are now back to normal rates of developed countries.
So why do so many people think China is exempt from this rule?
China’s three decades of meteoric growth began in the early 1980s, and its last year of double-digit growth was 2010.
This year, according to the International Monetary Fund, the growth rate will be 3.2% – but some observers suspect that the Chinese economy is not growing at all. They just lie about it.
Yet the Western and especially American media are full of stories about the threat China’s rise poses to American hegemony, and even to world peace. Should we just rank them alongside the absurd 1980s notion that Japan was going to be America’s main rival in the future?
Yes, but the Japanese themselves never succumbed to this delusion, so their disappointment at the end of the party was bearable. While many Chinese truly believed their country had the human and material resources to be a credible challenger to American hegemony – until their jet-powered economy died out.
Even if the 30-year rule allowed you a second try at the fast lane (which it doesn’t seem to), China wouldn’t be a plausible candidate. The Chinese economy is awash in unfunded debt, it is far too dependent on coal for energy, and the regime has fallen into the hands of a centralizing control freak.
No economic miracles there.
The end of the one-child policy has failed to boost China’s birth rate, which now stands at 1.15 children per woman. This not only affects total demand – the population will decrease by at least half by 2100 – but it radically changes the age profile.
The country will gain 200 million additional pensioners by 2050; it will also lose 200 million people of working age. This demographic drop would paralyze the economy for several generations, even if all the other economic signals were positive.
This will no doubt come as a relief to anyone who feared a possible major clash between the rising power and the reigning hegemon, the United States, or even a world war.
But they should not assume that the danger will diminish immediately; disappointment in Beijing could also fuel a military confrontation with the United States.
A rapidly growing great power can afford to wait because the future will only tip the balance further in its favor. As Deng Xiaoping, who abandoned Mao’s policies and sparked China’s 30 years of strong growth, said, China should “hide its capabilities and bide its time.”
But an ambitious great power whose growth has suddenly stopped is a very dangerous beast. If he sees only stagnation and relative decline ahead of him, he will be tempted to go bankrupt before losing ground.
It is not clear that President Xi Jinping and his allies have yet taken into account that the old ultra-high growth rate will never return and that China will never be stronger vis-à-vis the states. United than it is right now.
But they will certainly find out before too long, and it will be the time of maximum danger.
Gwynne Dyer’s new book is The Shortest History of War.