When Reality Knocks

Josef Joffe has an interesting Tablet piece on problems piling up in China.

China’s Future Ain’t What it Used to Be
20 years after the Goldman report, the BRICS are floundering

In January, China’s National Bureau of Statistics made it official: After decades of fabulous GDP growth, the rate is now down to 3%. The culprit is Xi Jinping’s “zero-COVID” policy, plus ruptured supply chains and soaring energy prices. In the post-lockdown recovery, growth will of course bounce back, but not into the enduring double-digit rates prevailing since the 1980s, when China became the envy of the world.

Not unfamiliar developments, but the whole piece is well worth reading as a reminder of powerful and more long-term forces beyond government control. 

Beijing’s worst enemy is the steady decline of its working-age population, driven by plummeting birth rates. Also in January, China went past the tipping point, reporting negative population growth for the first time in 60 years—a loss of 850,000 inhabitants. By midcentury, China will be the oldest big economy in the world, with an army of 350 million pensioners who don’t produce but soak up ever more social support resources.

Then we have the familiar political story of how too much government control bears down on the feedback needed to maintain economic dynamism. Nobody is immune.

Since Lenin, Western sages—think George Bernard Shaw or Jean-Paul Sartre—have fallen for what I call “modernitarianism” as the fastest path to development. The state, they believed, was better than the market, delivering both wealth and equality. They kept missing the point. In the clash between power and profit, power wins. Even assuming that Xi’s henchmen had told him the truth about “zero-COVID” as an economy killer, why would a despot care? When reality knocks, control comes first, suppressing real-time feedback. Until very recently, Beijing methodically suppressed the horrifying COVID data.