The future course of China is formed upon layers of streams: long lasting but slow-moving eddies, rapids that peter out before the next riverbend, brooks, rivers, and waterfalls between. The white waters of yesteryear have passed, but the river betrays an inexorable and dangerous quickening. Though my hydrological skills are sorely limited, my prognosis is that China’s future past the next decade is already largely determined by some deep and subtle undercurrents, with only a couple of tributaries available—limited ability for the leadership to change course.
The analytic framework I’ve developed here might have a skeleton, but it is insufficiently fleshed out and sadly leaves much to be desired. Each analogy falls short in its own way, yet I think they each have a core of truth, that—apart from some obvious decision branches, China’s future is probably clearer than it was in 2020-2022, and there are not that many policy levers that could nudge China onto a markedly different course. I could always be completely wrong, and I am not sure how to measure or falsify this claim (I don’t think measures of uncertainty based on standard deviation would work). However, I do want to make the case that unless China pursues a war over Taiwan or engages in reforms on the scale of hukou reform, there is a limited degree to which the Chinese government can steer the direction of the country that would create meaningfully more positive outcomes on the 10+ year scale.
I earnestly feel that China will have a much more predictable and normal year than last year, that analysis of China will be easier in 2023, and that the broadest, most immutable trends, point towards relative stability for China. For anyone living in or studying China in 2022, uncertainties were profound. Prognoses of when China would lift zero-COVID that moved back after each major event on the calendar. The crossroads for elite succession was shrouded in the darkest shadows. These two developments dominated analysis of China in 2022, and everyone, even the better informed, did little more than fumble around in the dark.
The 20th Party Congress was the political superstructure, shaping how all leaders and officials acted. Zero-COVID was the economic and societal superstructure, shaping the character of the Chinese economy both in success and failure. With these both in the rearview mirror, what is coming down the pike?
Long run trends
The rapid aging of the Chinese population is likely the most important long run trend. While I am certainly no demographer, population trends appear fairly accurate predictors over medium time scales, difficult to reverse, and a major input on state power and outcomes. The size of populations directly affects economic growth, technological advancement, and military capabilities. The shape of a population pyramid also matters greatly for economic growth windows and political instability. China’s demographic fate is sealed—the population will decline and age, and no “X-child” rules will change that. Only massive immigration might reverse China’s destiny, and that is nigh unimaginable. Of course, China may still be able to mitigate the worst effects of this trend; Japan, South Korea, and others have not been consigned to the dustbin of history yet. But, despite some counterarguments by serious thinkers, my best guess is that the likely effects will be massive and unavoidable.
China has faces major headwinds from global warming. Based on one analysis, China was among the 21 to 50 countries most affected by extreme weather events from 2000 to 2019. Another analysis more optimistically rated China as the country 68th least vulnerable to climate change, putting it in the middle of the list. Yet another analysis from 2021 put China higher, at 24 out of 77 countries, in “resilience” to climate risks. Despite the variation, this suggests that the challenges China faces from climate change will be massive in absolute terms, given China’s size, and require significant countermeasures—which China is capable of, but which will be costly. One World Bank report from 2022 stated that “unabated climate change could lead to estimated GDP losses of between 0.5 and 2.3 percent as early as 2030” for China. So, China will face enormous challenges and must undertake unprecedented investments in climate resilient technologies. This trend will not change, and if China (and the rest of the world) fail to take action, many will suffer. There is definitely downside risk too if climate trajectories will spiral out of control, but China will be substantially challenged even if that does not occur.
While these two just about immovable macrotrends will shape China’s course for the rest of the century, their impact is more diffuse—yet certain—than emerging technology.1 There is a substantial possibility that AI technologies that transform human livelihood and economics will arise in coming decades. We are developing ever more dangerous biological capabilities. Quantum computing could break encryption as we know it and supercharge AI development. You can go on and on. From my understanding, technological forecasting has a much more mixed record than demographics or climate,2 but if China does achieve any breakthroughs on any of these technological fronts, it would likely have an even greater impact than the demographic and perhaps climate. While the Chinese state is able to move this tiller within a certain arc, it lacks full control over this outcome.
Near term decision points
Swapping to a short-term lens, it feels like all policy perturbations imaginable (by me) are just ripples that will dissipate in less than a decade save one—Taiwan. A Chinese invasion of Taiwan would be cataclysmic. One estimate conservatively forecasts costs around $2 trillion in a sanction-less scenario, a 2016 RAND study forecasts declines in US GDP of 5-10% ($1-2 trillion) and Chinese GDP of 25-35% ($4.5-6 trillion) in event of a one-year long war, and others have even higher estimates. Millions could die. It could take years for the global economy to return to pre-war levels, and both China and the US would suffer massive losses across the board.
Apart from Taiwan though, what massive new reforms can China undertake? Are there any policy interventions still in the quiver that would decisively alter China’s trajectory? Full elimination of the household registration system, hukou, is the biggest one I can think of, allowing free movement of workers between the cities and countryside, which could juice economic growth. Is there anything else? China has already poured money and resources into development of emerging technology, and marginal benefit of additional investments is decreasing. Policy tweaks are always available, but pouring more money into emerging technology has no guarantees.
At the confluence
If this is right, then we should be able to roughly map the contours of what China will look like in the coming 10-30 years. And note that we are operating under an assumption that China’s governance system will not change in this time, and the CCP will presumably still control China through this period. While it is always possible for the CCP to fall, I do not think it is particularly likely given the level of coercive control over the population as well as overall nontrivial (and possibly high) support of the population, at least before COVID. The biggest decision points might decisively alter the CCP’s trajectory are invading Taiwan and reforming hukou. Whether China seizes the “commanding heights” of technology depend on many more factors than government policies, but the central government can increase the likelihood of success moderately.
There are certainly additional long, medium, and short term trends not mentioned, but these should hold the commanding heights. Overall, there may not be as much uncertainty about China’s future as many seem to think, and we can identify the policy decisions that would branch us off into drastically different universes. Unknown unknowns always lurk, but no other shapes loom as large when I try to peer into the distant future.
Does any of this have real world consequences? Perhaps if you believe I am right, you should think that China’s comprehensive national power and economic will hew closer to a linear trend than anything more extreme. You might prefer forecasts weighted towards the status quo rather than towards change. You may conclude (perversely, for someone who studies China) that lack of expertise on China is not as disastrous as it otherwise would be. You might become even more focused on Taiwan and technology at the expense of the other, fascinating, and multitudinous topics in China.
Sadly, my laziness means that I currently do not have forecasts to offer to help substantiate my position. Perhaps I will in a later post. I’ve already spent a lot more time than expected writing this post, and researching proper questions and attempting to answer them would take more time than I am willing to commit now. Hopefully I can figure out how to properly put my theory through the wringer later.
I am using this as a catch all, but refer primarily to AI, synthetic biology, quantum computing, and others.
Would love to see something more comprehensive on tech forecasting.