CHAPTER 12 The People’s Republic of China

T he most serious challenge to U.S. global leadership since the end of

the Cold War comes from China. China is home to the world’s biggest
population, and in the coming decade it could overtake the United States
as the globe’s largest economy. Beijing is increasingly putting its economic
might behind its military and political initiatives. It is challenging U.S. pri-
macy in East Asia and contesting U.S. leadership around the world. Some
argue that we must begin to come to grips with what life will be like “when
China rules the world.”1 Others maintain that the United States will not pass
so easily into the night and, instead, we must gird ourselves for the coming
World War III.2
Fortunately, from the perspective of the United States and the rest of the
free world, these predictions are much too dire. China has a storied past, and
it will likely always remain a great power, but it will not overtake the United
States as the world’s leading state any time soon. Its underlying institutions
are simply not up to the task.

China’s Thousands of Years of Civilization

The Chinese word for their country is Zhong Guo, or Central Kingdom, and
through much of its history, China saw itself as the center of the universe.3
In 221 bc, Qin Shi Huangdi conquered other warring states and enthroned
himself as the first emperor of a unified China. From that time until the early
20th century, China was ruled by a succession of imperial dynasties: Qin,
Han, Xin, Jin, Sui, Tang, Song, Liao, Jin, Yuan, Ming, and Qing. The em-
peror (also known as the Son of Heaven) was believed to be part divine and
god’s representative on Earth. In East Asia, China was the center of the in-
ternational system with smaller, tributary states on its periphery. Leaders
from smaller states in Asia would visit Beijing to kowtow to the Son of
Heaven and pay tribute in the form of food, precious metals, art, and other
valuable goods.
China was the leading power in Asia for centuries, and it may have pos-
sessed the globe’s largest economy through much of this time. After all, in
an era when economies were mostly subsistence agriculture, land and people
were the two primary economic assets, and China had plenty of both. The
Chinese are proud of this glorious past and often speak about their thousands
of years of continuous civilization.
To be sure, China did well when competing against other autocrats.
But its first encounter with democratic power led to the beginning of a bad
century.
The Chinese refer to the years between 1839 and 1949 as the “Century
of Humiliation.” When European explorers first reached China in the 1500s,
they wanted to establish trading and diplomatic relations. But the emperor
viewed the Europeans merely as another group of potential tribute bearers.
China was not especially interested in trade with Europe and certainly did
not believe that European diplomats and the rulers they represented deserved
an equal platform with the Son of Heaven. The emperor allowed some lim-
ited trade under tightly controlled conditions over the coming centuries, but
the European powers were not satisfied with this arrangement.
To pry China open, the United Kingdom (as we will recall from Chapter 8,
the world’s leading democratic power at the time), launched the Opium Wars
from 1839 to 1842. Britain had overtaken the Dutch as the world’s largest
opium trader and, in what was not the proudest moment in Western history,
it was willing to wage war for the right to traffic narcotics in China. In the
end, London was victorious. The Chinese military was simply no match for
modern British warships and firepower.
The emperor conceded to British demands. He set up five new trading
posts (including in Shanghai) and ceded in perpetuity to the United Kingdom
the small island of Hong Kong to be used for commercial purposes.
Other European powers followed Britain’s lead. In a series of what China
considers “unequal treaties,” major powers forced China to cede territory
for trading ports and spheres of influence. The United States (1844) and
France (1844) were granted the same trading rights as Great Britain. Russia

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reclaimed territory in Outer Manchuria in 1858. In 1887, the Qing dynasty
signed Macau over to Portugal for “permanent occupation.” Germany seized
Tsingtao in 1898 and established the first European colony on the Chinese
mainland. (Thanks to Germany’s presence, Tsingtao produces some of China’s
best beer to this day; granted, this is not a very high bar.)
In what may have been the ultimate humiliation, however, China even
lost territory to an Asian power. Unlike China, which had shunned Western
ways, Japan whole-​heartedly adopted the lessons of European modernization
and industrialization and, by the late 1800s, Tokyo was a major regional
power. It defeated Beijing in the First Sino-​Japanese War of 1894–​1895.
China was forced to recognize Korean independence and to cede Taiwan
and parts of Manchuria to Japan. In addition, Japan annexed the disputed
Senkaku/​Diayou islands—​a source of contention to this day.
China’s internal weaknesses, combined with these external pressures,
contributed to a series of domestic rebellions. The Taiping Rebellion, from
1850 to 1864, was one of the bloodiest civil wars in history, resulting in
tens of millions of fatalities. Hong Xiuquan, the leader of the rebel forces,
believed he was the brother of Jesus Christ and aspired to overthrow the
Chinese empire and establish a Christian nation. He succeeded in generating
a large following and controlling much of Southern China before his eventual
defeat in the decade-​long struggle.
The Boxer Rebellion, from 1899 to 1901, was an uprising against the
growing foreign encroachments into China and it won the backing of the
Chinese imperial court. This official Chinese resistance, however, only further
antagonized the European powers, who crushed the Rebellion, marched on
Beijing, and sacked the city.
In the midst of these serious military challenges, and in a textbook ex-
ample of poor autocratic decision-​making, China’s Empress Dowager Cixi de-
cided to divert money from the Chinese navy in order to rebuild a sumptuous
stone boat pavilion in the royal Summer Palace. Her empire may have been
destroyed, but she had by the far the nicest pavilion in the neighborhood.
The powerlessness of the Chinese empire in the face of expansionist for-
eign powers, and the corruption of the Chinese imperial court, inspired
young reformers with a desire to overthrow the traditional imperial system.
Sun Yat-​sen achieved this goal in 1912, establishing a Republic of China led
by his Kuomintang Party (KMT) and terminating the over two-​thousand-​
year period of rule by the Sons of Heaven.
Sun Yat-​sen was never able to consolidate his power, however, leading
to decades of internal conflict. The most powerful quarreling factions were
the KMT, led by Chiang Kai-​Shek after 1925, and supported by the United

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States, and Mao Zedong’s Chinese Communist Party (CCP). These parties
combined forces to fight Japanese occupation during World War II. As soon
as Japan was defeated, however, they turned back on each other.
Drawing on his strong popular support in the Chinese countryside and
the credit he won for defeating the Japanese imperialists in World War II,
Mao eventually emerged victorious. The KMT fled to the island of Taiwan,
where they set up a rival government in exile that remains to this day. Mao
established the communist People’s Republic of China in Beijing in 1949. In
announcing the new system, he declared that the century of humiliation was
over and that, finally, the “Chinese people have stood up.”
In reality, China’s period of humiliation was far from over; but this
time the wounds were self-​inflicted. Mao was a charismatic leader who had
succeeded in defeating the Japanese in World War II, winning the Chinese
civil war, and unifying the country. But, he was an ineffective governor.
As autocrats are wont to do, he made one rash decision after another, lurching
China from catastrophe to catastrophe. In his “Hundred Flowers Campaign”
of 1956, he encouraged open debate and urged those who disagreed with his
policies to freely express their views. Then he promptly arrested them and
pressed them into forced labor. In his “Great Leap Forward” campaign from
1958 to 1962, he tried to rapidly industrialize China by ordering peasants to
start “backyard furnaces” for producing iron. Millions of Chinese farmers col-
lected metal from their homes and farms and melted it down. Instead of rapid
development, the campaign led to the Great Chinese Famine, in which tens
of millions of people starved to death. Undeterred by his unbroken string of
failures, Mao launched a “Cultural Revolution” from 1966 to 1976 with the
goal of restoring ideological purity and purging noncommunists. The cam-
paign led to a decade of persecution of innocents, the destruction of precious
cultural and historical artifacts, and massive economic losses. Later, the CCP
would formally admit that the Cultural Revolution was “responsible for the
most severe setback and the heaviest losses suffered by the Party, the country,
and the people since the founding of the People’s Republic.”4
Mao’s record in foreign policy was slightly better, but also saw major
mistakes. On the positive side of the ledger, he successfully prevented his
ally, North Korea, from being overrun in the Korean War in the early 1950s
and helped China to become a nuclear-​armed power in 1964. On the down
side, he instigated two Taiwan Straits crises in the 1950s that nearly caused
a nuclear war with the United States. Not bothered by the prospect of war
with nuclear superpowers, he then attacked his former ally, the Soviet Union,
in a border dispute in 1969. This conflict also saw Mao ultimately capitu-
late under Soviet nuclear threats.5 To his credit, Mao, in a tight spot with

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Moscow, switched sides and engineered an opening to the United States in
the early 1970s.

The Rise of a Chinese Superpower

Mao died in 1976. While he had declared that China stood up in 1949, the
country did not begin to recover fully until after his death. His successor,
Deng Xiaoping, put in place much-​needed economic reforms in 1978. Deng
believed that China could adopt elements of the market-​economy that had
proven successful in the West, while maintaining strict Party control of pol-
itics. He opened up China to foreign investment and loosened restrictions on
internal markets. When asked whether this economic policy was communist
or capitalist, Deng famously replied that it does not matter whether a cat is
black or white, so long as it catches mice.
The tacit quid pro quo the CCP made with its people was that the Party
would provide economic growth and improved living standards, so long
as people keep their nose out of politics. The CCP refers to this combina-
tion of market economics and strict party control as “socialism with Chinese
characteristics.”
When pro-​democracy protestors arrived in Tiananmen Square in June
1989, holding a papier mâché “Goddess of Democracy,” modeled after the
Statue of Liberty, the CCP shot them and ran them over with tanks. When
other communist systems, including in Moscow, came crashing down at the
end of the Cold War, the CCP remained firmly in charge in Beijing.
Starting from a low baseline, Deng’s economic reforms turbo-​charged
China’s economy. It benefited from infusions of technology and capital from
abroad. Masses of peasants moved from the countryside to cities to find
higher-​paying jobs in industry. Chinese entrepreneurs started their own
enterprises and, benefiting from cheap labor, were able to produce inexpen-
sive goods for export in the international market.
Deng also placed China on a sounder footing in foreign policy. He
believed that China would eventually become a leading power, but it was
still relatively weak. For the foreseeable future, he advised that China “hide
its capabilities and bide its time.” In other words, he believed China would
be wise to maintain a low profile on the international stage as it continued to
rise. Then, in the future, when it was sufficiently powerful, it could boldly
announce its great power status.
Deng stepped back from his position atop China in 1992, but China’s
subsequent leaders Jiang Zemin (1993–​2003) and Hu Jintao (2003–​2013)

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followed his same basic approach to economic development and foreign
policy.
China’s rapid economic development since Deng’s reforms are perhaps the
most remarkable economic success story in world history. China maintained
double-​digit rates of economic growth for decades.6 This economic expansion
lifted 500 million people out of poverty. There is now a robust middle class in
China. The average Chinese person’s standard of living is much higher than
her parents. Average GDP per capita has risen from $194 current U.S. dollars
in 1980 to over $10,000 in 2019.7 In 1980, China did not rank among the
world’s ten largest economies and it possessed less than 2 percent of world
GDP. In 2010, China surpassed Japan as the world’s second-​largest economy
and it currently possesses about 15 percent of world GDP. Indeed, by 2030,
many economists predict that China could displace the United States as the
world’s largest overall economic power—​a spot the United States has held
since the late 19th century.
When the global financial crisis hit the West in 2008, China emerged
relatively unscathed. The CCP intervened to prop up the Chinese economy
with a massive stimulus package that included easy credit and infrastruc-
ture investments. The Chinese economy continued to grow. For years, people
admired the U.S. economic model, but the financial crisis led many around
the world to wonder whether China might in fact have the better system.
For years, economists argued that to become a leading economic power,
China would need to go beyond the steps that lifted it from poverty. It
would have to transition from export-​led growth to a more consumer-​driven
economy. In addition, it would need to go beyond importing technology
from abroad and become a true technology innovator itself. Some now be-
lieve it has successfully made that transition. Through its program formerly
known as “Made in China 2025,” the CCP has set out to dominate the most
important technologies of the 21st century. And by some measures China
may be ahead of the United States in key areas, such as 5G wireless tech-
nology, artificial intelligence, and quantum computing.
As it grew economically, Washington had hoped that China would be-
come a “responsible stakeholder” in the U.S.-​led, rules-​based international
order. The hope was that, like South Korea and Taiwan before it, China would
integrate into the global economic system, transition to a democratic form
of government, and cooperate internationally through formal institutions.
Unfortunately, these fond hopes were not borne out. China stubbornly
resisted democratization even as its economy grew. Most importantly, China’s
newest leader has discarded many of Deng’s dictums as he has launched China
on a new, more confrontational path.

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China’s Third Revolution
In 2013, China experienced its third revolution.8 There was the communist
revolution of 1949, Deng’s reforms of 1978, and the Xi Jinping revolution
of 2013.
Mao ruled China as a dictator. Following his passing, there was the devel-
opment of a more institutionalized decision-​making process with a Politburo
Standing Committee led by a general secretary. Since the mid-​1990s, the
general secretary of the CCP has also been the president of China. Over this
period, China’s governance structure was described by political scientists as a
“bureaucratic authoritarian,” or single-​party state.
In recent years, however, dictatorship has returned to China.9 Since coming
to power in 2013, Xi Jinping has ruthlessly consolidated power. Xi sys-
tematically eliminated rivals in an “anticorruption” campaign. To be clear,
there is massive corruption within the CCP with party officials becoming
multimillionaires, but Xi was selective in how he cracked down, going after
enemies and not friends. Moreover, in 2018, the Chinese National People’s
Congress lifted term limits on the presidency, paving the way for Xi to become
president for life. He is the most powerful Chinese leader since Chairman Mao.
Xi has also discarded Deng’s guidance about “hiding and biding” and
launched China on a new, more assertive path in foreign and defense policy.
In the last chapter we marked 2014 as the year in which great power rivalry
returned. In Europe, this was the date in which Russia invaded Ukraine. In
Asia, it was when China began its island building campaign in the South
China Sea.
For years, China and a number of Southeast Asian claimants disputed own-
ership of islands in the South China Sea and the natural resource rights that
come along them. In 2014, China began taking the islands—​including from
U.S. treaty ally the Philippines—​through military coercion. China used land
reclamation techniques to build contested reefs into larger islands and then
occupied them. President Xi lied to President Obama’s face in a Rose Garden
ceremony in 2015, declaring that China would not militarize the islands.
Within months, the CCP was outfitting the islands with landing strips, naval
ports, and surface-​to-​air missiles. International tribunals have ruled against
Chinese claims, but the CCP remains undaunted. The United States and the
international community have no good options for forcing China out and the
illegal seizures of these contested islands could become permanent.
Xi’s signature foreign policy agenda, however, is the Belt and Road
Initiative (BRI). Formally, BRI is a plan to use China’s vast cash reserves
to invest in roads, bridges, and ports in Central Asia and the Middle East

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in order to resurrect the old Silk Road trading routes between China and
Europe. In practice, it is also a grand strategy designed to increase China’s ge-
opolitical clout by making countries around the world dependent on Chinese
investments. Through BRI, China has increased its presence and influence in
Asia, Africa, Latin America, and even Europe.
Beijing has promised to invest up to $150 billion over the next five years
on top of the estimated $56 billion spent since 2014 on the prodigious effort.
This would be 53 percent higher than what the United States spent on the
Marshall Plan to rebuild Europe after World War II.10
China’s BRI inroads have been most impressive in Asia, where it has
gained a greater presence in Pakistan, Myanmar, Laos, Cambodia, Central
Asia, Bangladesh, and Sri Lanka.
In Sri Lanka, China agreed to build a port in exchange for the Sri Lankan
government repaying China over time from the proceeds derived from the
port’s operations. But, the agreement turned out to be a debt trap. The
terms of the deal were structured in such a way as to make it impossible for
Sri Lanka to ever really repay the loan. When Sri Lanka fell behind on its
payments, China seized control of the port and the surrounding territory.
Many suspect that the CCP will use the port as a military base as it seeks to
expand its global footprint.
Indeed, some believe that China is attempting to construct a “string of
pearls” of ports and naval bases from China, through South and Southeast
Asia, to the Horn of Africa. This would enable China to protect its sea lines
of communication and project commercial, diplomatic, and military power
throughout the Indo-​Pacific region.
The European portion of this BRI effort includes the “16+1” project.
This is an attempt by China to curry favor with sixteen nations of Eastern
Europe that had formerly been part of the communist bloc during the Cold
War. Since the end of the Cold War, these European nations and members
of NATO were America’s home base, but they are increasingly becoming a
battlefield of the new Cold War among the United States, Russia, and China.
In Western Europe, a Chinese state company now operates the port of
Piraeus in Greece and Trieste in Italy. The former was used by the Athenians
in the Peloponnesian wars, and the latter was formerly part of the Venetian
Empire. The European colonization of Asia began with the acquisition of ports
in Galle and elsewhere on the way to greater geopolitical influence. Piraeus and
Trieste may be the first steps toward China’s attempted colonization of Europe.
As China’s economy continues to grow, many countries around the world
have become increasingly dependent on Chinese trade and investment. Even
though many are concerned about China’s new, more aggressive stance, they

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are unwilling to confront Beijing because they feel they have no choice but
to do business with this new economic superpower.
Xi has also attempted to cultivate better relations with America’s other
great rival, Russia. In recent years, Russia and China have conducted joint
military exercises and the U.S. Director of National Intelligence has stated
that Sino-​Russian relations are closer today than at any time since the 1950s.11
China has also made a dedicated effort to increase its “soft power” over-
seas. Here, China was blessed with much raw material, as it possesses a deep
history and rich culture that is awe-​inspiring to many. To leverage this
strength, China has founded Confucius Institutes all over the world to pro-
mote Chinese language and culture. These Institutes are funded by the CCP’s
propaganda arm with the unstated purpose of promoting a pro-​China view-
point and blunting criticism of Chinese policies in the West.
In addition, the CCP has been engaged in more malign and systematic
“sharp power” efforts, seeking to use the openness of democratic societies
to its advantage.12 China’s “United Front” operates in democratic states, in-
cluding the United States, to influence government, business, media, and the
academy.13 In the most egregious example, the CCP delivered sacks of cash
to an Australian member of parliament in exchange for his advocacy of pro-​
China policies.14
As many have perceived the United States pulling back from the world in
recent years, President Xi has attempted to step in and fill the void. He has
given speeches in high-​profile venues, such as the World Economic Forum
in Davos, attempting to portray China as the new global champion for free
trade and combating climate change.
The new China challenge also includes an important military dimension.
The Chinese People’s Liberation Army (PLA) has made military moderniza-
tion a major priority over the past several decades. Chinese strategists have
gone to school on the United States and developed a sophisticated Anti-​
Access Area Denial (A2/​AD) strategy designed to defeat the projection of
American military power into East Asia and, over time, to push American
forces out of Asia altogether.
The PLA is also investing heavily in the military capabilities needed to
support this strategy. In many areas, such as land-​based anti-​ship missiles
and counterspace, China has an edge over the United States.15 Moreover,
while the United States must defend a far-​flung system of alliances, Beijing
can focus its energies on an East Asia contingency. A decade ago, U.S. mil-
itary planners joked that China’s only option for invading Taiwan would be
a million-​man swim. Today, they doubt whether the Pentagon could still
defend the island from a Chinese attack.

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 Moreover, China is already lifting its sights beyond East Asia. It is
establishing an overseas military presence with a naval base in Djibouti and a
listening station in Argentina.16 Like with civilian technology, some suspect
that China may also have an edge when it comes to the military technology
of the 21st century, including with militarized AI, directed energy, and hy-
personic missiles.
As noted in the introduction, the 2018 U.S. National Defense Strategy
states clearly that the return of great power competition with Russia and
China is the greatest threat to U.S. national security. Offline, many U.S. de-
fense officials will say that China is the bigger concern. Then-acting U.S.
Secretary of Defense Patrick Shanahan set out three priorities in 2019: China,
China, and China.17 Washington can throw money at the Russia problem,
but China may be the first true peer-​competitor the United States has ever
faced. Many in the U.S. defense establishment fear that World War III is pos-
sible and, if so, the United States might very well lose.
In sum, over the past several years, China’s economic, political, and mil-
itary power has grown rapidly. Many believe that these trends will continue
and the United States, like great powers of the past, will eventually be passed
by a rising China.
From our current vantage point, we cannot know, of course, how exactly
this rivalry will play out. But we can assess the strength of China’s domestic
political institutions and this exercise demonstrates that Xi is launching this
new challenge from a fragile base.

China’s Autocratic Politics

China is an autocracy. As stated earlier, the CCP maintains complete political
control in China and President Xi is the most dictatorial Chinese leader since
Mao Zedong. As in other autocracies, the Chinese people lack basic political
and civil liberties. They are not allowed a voice in the selection of their govern-
ment. The CCP uses censorship and repression against those who dare to speak
out against it. In one comical example, the party banned online images of the
children’s cartoon character Winnie the Pooh when commentators noted the
unflattering likeness between the rotund and pale bear and President Xi.
Turning to more serious matters, China keeps over one million Muslim
Uighurs locked up against their will in “re-​education” camps in China’s
western Xinjiang province. There they are tortured, instructed to recite
communist propaganda, and force-​fed pork and alcohol in contravention of
Muslim beliefs. The purpose is nothing short of the ethnic cleansing of this
minority group in order to force them to be part of a unified Chinese nation.

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 Chinese dissidents, including world-​renowned artist Ai Weiwei, are rou-
tinely jailed and subjected to inhuman treatment for no more serious offense
than criticizing government policy.
The CCP uses facial-​recognition technology to follow citizens and mon-
itor their behavior. Each Chinese citizen is given a “social credit” score that
can be marked down for infractions as minor as jaywalking. People with
poor social credit lose basic freedoms and cannot, for example, purchase train
tickets or engage in other quotidian affairs.
Many are rightly concerned about the growing authoritarianism in China,
and these trends are certainly worrisome for the Chinese people. From the per-
spective of great power rivalry, however, creeping authoritarianism in China
has another implication: it renders China less fit to compete on the global stage.

China’s Autocratic Economics

Many analysts believe that the “China Model” of “state-​led capitalism” is
the way of the future.18 Unlike in the United States, when the CCP decides
something is necessary for development, like new infrastructure investment,
it cracks some skulls and gets it done. No messy political debates get in the
way. This model is certainly attractive to many autocrats around the world
who seek legitimation for their selfish desire to rule with an iron fist.
Theory and history suggest, however, that state-​ planned economies
cannot generate high rates of return over the long term. Their poor economic
institutions do not incentivize growth-​enhancing activity. They do not build
deep and liquid capital markets. And they are less innovative. Indeed, a
closer look at these areas reveal that China’s future economic prospects are
much bleaker than many appreciate.19
Many Western analysts focus on the modernizing capitalist forces in
China’s economy and overlook the vast segments that are still mismanaged
by the CCP. Autocratic leaders choose political control over economic effi-
ciency, and China has been no different. While the “reform and opening”
period offered gradual adjustments away from communism in some areas,
the Chinese state maintained tight control in other ways. Indeed, the en-
tire purpose of the reforms was to develop the Chinese economy in order to
strengthen the CCP and the state.
Small-​and medium-​sized firms were privatized but large state-​owned
enterprises (SOEs) remain in the hands of the government. They serve the
CCP by, for example, offering employment to large numbers of people. But
these large public firms are inefficient and many are unprofitable, but they
continue to play an outsized role in the Chinese economy.

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 Moreover, CCP control has meant that all of China’s major factors of pro-
duction are mismanaged.20 Functioning capital markets channel money to its
most efficient uses, but the CCP directs money to the politically most-​expedient
applications. The Party requires state banks to provide financing to SOE
“zombie firms” to keep them alive, but the banks will likely never recover these
bad debts. These and other unprofitable loans are causing a major debt problem
in China. America’s debt-​to-​GPD ratio is much too high at about 100 percent,
but unofficial estimates put China’s debt at three times that amount.21 This is a
financial ticking time bomb embedded in the Chinese financial system.
Land use decisions are also made to advance political goals at the cost of
economic performance. The CCP, for example, gives tracts of land to local
party officials for pet development projects that make little economic sense.
Furthermore in a bid to get rich quick, the CCP neglected environmental
safeguards during China’s industrialization. The result has been pollution
of water, air, and soil.22 This has major implications for quality of life in
China. Chinese colleagues have warned me, for example, against bringing
my daughter to China because the pollution would be too harmful on her
developing lungs. When I ask about the respiratory health of their chil-
dren, they reply that it is a major problem, but that, unlike me, they do
not have a choice. Indeed, environmental degradation is taking a direct toll
on Chinese economic performance by negatively impacting the health of its
workforce and contributing to substandard agricultural output.
The CCP has also kneecapped its own labor force. China restricts the move-
ment of people for reasons of political control (such as by limiting the number
of people who can live in Beijing), but this undermines labor market mobility.
Moreover, decades of China’s “one child policy” means that China will have a
declining population. Economic productivity depends on maintaining a large
portion of one’s population in the labor force, but China will soon have large
numbers of people ageing out of the workforce and too few working-​age people
to support them. China will get old before it gets rich.
China could supplement its working-age population with immigration,
but China, like most autocracies, is a closed society. Indeed, China suffers
from a flow of human capital going the other way, with many talented
Chinese studying in the United States and Europe and never returning home.
Increasing numbers of Chinese students have been returning in recent years,
but the net brain drain is still working against China, not for it.
In a bid to stimulate China’s slowing economy, the CCP has made massive
infrastructure investments, but much of this investment has been wasted.
Basic infrastructure, like roads, bridges, real estate, and airports, were needed
in the early days of China’s reform period, and investments in these areas

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contributed to China’s rapid growth. But the government has continued to
make infrastructure investments even though there is much less need today.
I have traveled into China’s interior, where I have passed entire ghost towns
with entire blocks of empty buildings and no people. This infrastructure
spending goosed China’s declining growth numbers (because by definition,
any government spending increases the size of a country’s GDP) but ghost
cities in the middle of nowhere do not provide a good return on investment.
In addition, even China’s once successful export-​led model of growth is
coming under new pressures. Autocracies do not mind cheating on interna-
tional agreements, and for decades Beijing systematically violated the rules
of the global trading system. China stole technology from Western firms
through industrial espionage and forced technology transfer. Its malicious
and widespread theft of intellectual property may have been the largest
transfer of wealth in human history. The CCP gives its firms an unfair ad-
vantage on global markets by providing them with government subsidies
and manipulating China’s currency. It forced foreign firms to find a Chinese
partner in order to access China’s large market. And the list goes on.
For decades, the rest of the world was willing to turn a blind eye to these
egregious violations because it hoped that as China grew richer, it would
become more cooperative on the international stage. Instead, a richer China
only became more combative under President Xi. The rest of the world is
no longer willing to be taken advantage of by the CCP and a backlash is
forming. Japan, the European Union, and the United States have all decried
China’s unfair trade practices and they are taking concrete steps to fight back.
The United States, for example, launched a trade war against China in 2018
and China’s trade and growth numbers are suffering as a result.
The eventual slowing of China’s economy was to be expected. Acemoglu
and Robinson have argued that autocracies can generate high rates of growth
over the short term by directing unproductive resources toward more effi-
cient uses. The CCP’s early growth model relied on moving unproductive
rural labor in agriculture to urban manufacturing jobs to support export-​led
growth. It also relied on catching up with the advanced world by importing
foreign technology. And it was boosted by government infrastructure
spending. They argue that the easy gains from this model have been fully
exploited, however, and absent the adoption of more inclusive economic
policies, China’s growth model will run out of steam.
Many countries in the past found themselves in a similar “middle income
trap.” They were able to move from low to middle-​income status through in-
dustrialization, but they eventually stalled out.23 As China has become richer,
it has undermined its own model of export-​led growth because its wealthier

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workers demand higher salaries and make Chinese exports less competitive
on international markets. China has been attempting to move up the value
chain of production and transition to a more consumer-​driven economy, but
the results have not yet met expectations.
To continue to grow, therefore, China needs a next act. One obvious
step would be to continue its liberalizing reforms and open up more of its
economy to a market-​based approach. As Acemoglu and Robinson point out,
however, closed governments do not like opening their economies.24 Indeed,
today President Xi is moving in the exact opposite direction, reasserting
CCP control over the economy and undermining the liberalization of the
economy. According to a study conducted by the Asia Society, for example,
in ten key areas in which the CCP has promised economic reforms, Xi has
stalled or reversed course in eight of them.25
China’s growth rates have been slowing in recent years as a result. For
decades, the Chinese economy regularly grew at over 10 percent a year. It is
not possible to keep such high growth rates indefinitely and many economists
suspected that Chinese growth would slow as it began to catch up with the
industrialized world. Indeed, in 2019, the CCP set its growth target at a
mere 6 percent, the lowest since 1990. In the words of President Xi, slower
growth rates in China have become the “new normal.”26 Signs of China’s
slowing economy abound. In 2018, for example, the number of automobile
purchases in China declined for the first time in nearly three decades.
Furthermore, even the reported growth numbers may be too high. There
is growing evidence that the CCP has for years been cooking the books and
exaggerating its official growth numbers. We know that autocracies tend to dis-
semble, so it is surprising that we accepted the CCP’s growth numbers at face
value for so long. Indeed, the CCP may have even been lying to itself. When a
totalitarian government instructs a provincial official that his target growth rate
will be 10%, is it any wonder that he reports that he effectively met his target?
No one really knows China’s true economic growth rate, but it is almost
certainly less than what the CCP is reporting. Some Chinese academics have
estimated that the current growth rate is 1.5 percent, lower than in the United
States.27 Other market analysts believe it might even be “closer to zero and
declining.”28
A decade ago, economists predicted that China would overtake the United
States as the world’s largest economy by 2020. Now, they are saying it will happen
by 2030. By 2030, the projections might be pushed back to 2040. Indeed, China
may never surpass the United States as the world’s largest economy.
China’s financial outlook is even dimmer still. When it comes to global
finance, we still live in a unipolar world dominated by the U.S. dollar and

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financial system. When investors want a safe investment, they buy U.S.
Treasury bills; they certainly do not look to Chinese bonds. The yield on a
10-​year Chinese bond is currently just over 3%, roughly double that in the
United States. Investors demand a premium to hold Chinese debt. Officials
in Beijing have called for the dollar to be replaced as the global reserve cur-
rency, but short of the creation of an open, deep, and liquid financial market
and a more sustainable and transparent economy, the Chinese Renminbi will
not dethrone the dollar anytime soon.
Here, too, the CCP has been reluctant to undertake the market reforms
necessary to become a true financial powerhouse The Shanghai Free Trade
Zone was set up in 2013 to give financial reforms a trial run, but the experi-
ment has been a disappointment. Again, the prioritization of regime survival
is stunting the implementation of reforms. The free flow of capital, currency
convertibility, establishment of foreign financial institutions, competition in
the banking sector, and ease of investment and doing business all remain
problems in China. In short, Beijing lacks the kind of financial institutions
that have propelled and sustained other great powers in the past. Financial
markets simply do not flourish in autocratic states.
Indeed, the biggest testament to the lack of faith in the Chinese economic
system is that wealthy Chinese do not keep their assets in China. Fearful that
their gains may disappear if left in the Central Kingdom, they instead offshore
their wealth, investing heavily in foreign real estate.29 According to laws in
some countries, a large real estate purchase is enough to guarantee citizen-
ship, providing an escape hatch in case the CCP cracks down, or if the system
collapses altogether. As such, the most precious investments of the CCP lead-
ership, their children, are often sent to study in Europe and the United States
for the same reason. With property, a degree, and a good job after graduation,
they can remain in the West if China turns pear shaped. This is not exactly a
vote of confidence by Chinese elites in China’s economic future.

Can China Innovate?

With market-​based reforms out of the question for now, then the future of
China’s growth depends in large part on the success of future state-​led pla-
nning, and the CCP is ready to place its next big bet. The program formerly
known as “Made in China 2025” is a CCP-​led program to help China become
the world leader in the next round of technological breakthroughs, including
AI, quantum computing, 3D printing, robotics, 5G wireless technology, ge-
netic engineering, and more.

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 Many believe that China is leading or will win this new tech arms race over
the United States. China currently seems to have an advantage in quantum
computing and certain applications of AI, for example, including driver-
less cars and facial recognition technology. As an autocracy, China has cer-
tain advantages. It can mass resources toward a specific goal, and it has spent
billions on AI. The CCP can also coerce its citizens to adopt new technologies.
If the CCP wants to put a billion people in driverless cars, for example, it can
force that to happen in a way that the United States simply cannot.30
In addition, China has the advantage of scale. The success of a social media
firm, for example, is directly related to the size of the network. The more people,
the more eyeballs, the more clicks, the more advertisements, the more revenue.
There are more people in China than the United States, so social media firms
can build bigger networks. Scale advantages help other industries as well.
China also has the advantage of being ruthless. It has less concern about
the welfare of its citizens. The United States could have more driverless cars
on the road or more facial recognition tracking of its citizens, but for federal
highway safety standards and privacy laws.
One widely read article, “Why Technology Favors Tyranny,” went so far as to
argue that new technology, like AI, gives dictators a systematic advantage over
democracies.31 In the past, it argued democracies excelled in growth and inno-
vation because they were better at processing data, but, since autocracies like the
CCP will have access to more data in an AI-​centric world, the tables will soon
be turned.
To be sure, China has some advantages in this new tech arms race. On the
other hand, we have hundreds of years of theory and history to suggest that
innovation does not tend to happen in autocratic states.
Indeed, on closer inspection, we see that China’s innovation model suffers
from the same dysfunctions as its regular economy. Instead of relying on
bottom-​up innovation, China’s strategy rests heavily on placing big bets
on mammoth, state-​supported, national-​champion firms, such as Alibaba,
Baidu, Tencent, and Huawei. These firms are doing well for now, but large
national champions are not good at sustaining innovation over the long
term. Big firms have an incentive to maintain the status quo and lock in
large market shares with their existing products. They see new, disruptive
technologies as a threat, not an opportunity.
Moreover, by betting on a few big firms, China is distorting the market
and picking winners and losers. In so doing, it makes the winners less efficient
and kills off other potential sources of innovation. Since the tech giants are
backed by the Party, there are real risks for small startups looking to challenge
the major players in China. Market systems tend to be better at hedging their

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bets across a broad range of possible growth trajectories. The CCP can throw
substantial resources behind a technology, but it does not know whether it is
picking the right winners. After all, China’s big bets may be wrong.
Furthermore, China’s innovation model is highly parasitic on the global in-
novation ecosystem and as China becomes more assertive internationally, it risks
losing access and undermining its own model. To the degree China has had
some success in tech innovation, it is because this has been an area in which the
Party has allowed a greater degree of openness to foreign talent, investment, and
international collaboration. China is producing vast numbers of scientists and
others with technology-​related degrees, but Chinese schools still cannot match
America’s leading universities. Indeed, China’s most talented technologists
today are still educated in the United States. After all, it is hard to produce
world-class research when China’s closed society prevents its scholars from
accessing the World Wide Web or Google Scholar. Many swoon over China’s
supposed lead in AI, but AI requires microchips, and China’s semiconductor in-
dustry lags behind. China is almost completely dependent on foreign-​produced
microchips. When the United States imposed a trade ban on Chinese tech giant
ZTE in April 2018, for example, the firm announced that it would have to
shut down. It simply could not operate without access to U.S. microchips. The
United States subsequently reversed the decision, but it revealed the vulnera-
bility of China’s innovation model to access to global markets. With increased
economic nationalism, ongoing trade wars, and the de-​coupling of the U.S. and
Chinese economies, China’s innovation model will likely suffer.
Moreover, China cannot become a worldwide technological leader if there
is not worldwide demand for its technology. China is good at building AI
algorithms to spy on its citizens, for example. It is currently exporting this
capability to other autocratic states. But this will not be a marketable product
in democratic nations, which include most of the world’s major economies.
More fundamentally, however, CCP meddling undermines the consumer
trust that is necessary for technology firms to succeed. China requires the es-
tablishment of a CCP organization inside all firms in China, including foreign
companies and technology firms. Its policy of “civil-​military” fusion requires
firms to share technology and data with the CCP whether they like it or not.
The Chinese firm Huawei produces high-​quality and affordable 5G wireless
technology, but many Western nations do not want it. They rightly fear that
the CCP will use the control of these networks for espionage, cyberattacks and
more. Countries from Australia, to Poland, to the United States have banned
Huawei products because they will not allow a potentially hostile CCP to
control the digital infrastructure of the 21st century. China cannot become a
global technology leader if the rest of the world does not trust its technology.

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 Finally, the idea that new technology systematically favors tyranny
reflects a fundamental misunderstanding about the sources of democratic
advantage. Democracies have not made better decisions historically be-
cause they possess and process more data. They excelled because they
used the data they had to consider multiple points of view, weigh pros
and cons, and make sound decisions. Dictators make poor decisions be-
cause they dismiss, or are not even exposed to, contrary arguments. Even
if China and other autocracies could control all the data in the world, it
will not help them fix their poor, politically-​driven decision making pro-
cess. In sum, China’s autocratic system will continue to hold back China’s
economic power.

China’s Autocratic Diplomacy

How does China fare in the diplomatic sphere? Many see China on the march,
growing its influence in every major world region. The analysis throughout
this book, however, suggests that autocracies like China will lack soft power,
and will be likely to provoke counterbalancing coalitions.
Consistent with this expectation, Beijing is a poor alliance builder.
Depending on how one counts, China has either zero or one formal ally.
In 1961, China and North Korea signed the Sino–​North Korean Mutual
Aid and Cooperation Friendship Treaty. The treaty contains a mutual de-
fense clause and has been continually renewed and is currently valid until
2021. North Korea is not among the world’s most effective alliance part-
ners, however, and on my frequent trips to Beijing, Chinese officials and
scholars have increasingly complained that Pyongyang is more of a lia-
bility than an asset. North Korea’s repeated nuclear and missile tests over
the past fourteen years have provoked an international crisis that could
escalate into conflict on China’s doorstep.32 China desires geopolitical sta-
bility that will provide it the time and space to continue its rise, but that
objective is placed at risk by North Korea’s illegal nuclear and missile
program.
Beijing would prefer that North Korea tone down its provocative beha-
vior, but it is unwilling and unable to stop it. With friends like that, who
needs enemies?
Beyond North Korea, China possesses no other formal allies. Beijing has
long insisted that it does not need formal alliance partners. In fact, Chinese
interlocutors spin this as an advantage. They see the U.S. alliance system
as imposing a major burden on the United States, and Beijing, therefore,
has made a strategic decision to eschew entangling alliances. This may be a

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sincerely held view, but to be a true regional and then global power, China
will need partners and allies around the world.
Some worry that China and Russia may band together to form a grand
autocratic anti-​American counterbalancing coalition, but this is unlikely.
While these autocratic powers will continue to cooperate in some areas, they
are unlikely to ever form a deep and trusting security partnership. There are
many conflicts of interest pushing these two autocratic powers apart. Russia
is fearful of China’s rising power. Given the vast natural resources and de-
clining population in Russia’s Far East, some have speculated that China,
with its need for resources and growing population, may attempt to make
a land grab there. Indeed, Russian experts tell me that their country must
maintain a large stockpile of tactical nuclear weapons, not because of the
United States, but to deter China. For a Moscow-​Beijing axis to form, the
roles would need to reverse from the Cold War pattern and President Putin
would need to be content to play the role of junior partner to President Xi.
That seems unlikely.
The most fundamental obstacle to the formation of a Sino-​Russian alli-
ance, however, is their domestic political systems. As we have seen throughout
this book, autocracies do not make effective alliance partners. Neither leader
fully trusts the other, and autocratic allies fight with each other more than
with the enemy. The last time Moscow and Beijing tried to form an alli-
ance, they nearly fought a nuclear war. Even if Putin and Xi sign a formal
defense pact tomorrow, it will not mean much because autocracies do not
keep their commitments. Autocratic allies often stab each other in the back.
These alliances only hold together when they are sustained by coercion (like
the Warsaw Pact during the Cold War), and China is not yet, and likely will
never be, powerful enough to mold Russia into a puppet state.
Not only has China not forged alliances but its heedless decision-​making
and aggressive behavior in recent years has begun to provoke counterbalancing
behavior. Lacking other sources of legitimacy, the CCP often generates sup-
port for its rule by ginning up nationalist sentiment. Provoking a crisis with
Japan or harping on other threats to China’s “core interests” are a good way to
gain public approval, but it comes at a cost internationally. Moreover, with a
Marxist-​Leninist system of government at home, Beijing habitually exports
this model of politics into its international relations. It strikes backroom
deals with foreign leaders with or without the support of their populations
and clumsily seeks to exert outright control over the policies of smaller states.
Increasingly, these and other behaviors are turning countries against China.
This is certainly true for the largest Pacific power: the United States.
For decades, the reigning strategy toward China was dual-​tracked: hope for

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cooperation, especially in the economic sphere; but prepare for the worst,
including hedging against the Chinese military threat. The U.S. business
community was the most sympathetic to China because it saw opportunities
to get rich in China’s vast internal market. But, now even the American
Chamber of Commerce in Beijing has soured on China. Defense and national
security experts are even more united on the need to get tough with China.
After decades of attempting to cultivate China as a partner, there is now a
bipartisan consensus in the U.S. national security community that China is
the number one security threat facing the country.33
Other major powers in Asia are also concerned by China’s recent behavior,
especially the democracies. The United States, Japan, India, and Australia
have formed “The Quad.” This diamond of leading democracies in Asia
has set up a mechanism to allow for joint military training and exercises.
Although not explicitly directed at China, the true purpose is not lost on
anyone.
Many smaller powers in Asia face a dilemma. On one hand, they are de-
pendent on China economically, they are forced to live in China’s neighbor-
hood, and they would like to maintain good relations with Beijing. On the
other hand, they are afraid of the CCP and hope that the United States will
help to guarantee their security against possible Chinese aggression. They do
not want to choose, and as long as the United States provides them an option,
they will not side with China.
There are many examples of China playing hardball with the very neighbors
it is trying to court. In 2014, for example, China built a billion-​dollar rig
in disputed waters off of Vietnam’s coast. The rig may have completed its
mission, but at high cost to the Sino-​Vietnamese relationship. Ties between
Washington and Hanoi have since flourished, with the State Department
announcing soon after that the United States would lift its ban on the sale of
lethal weapons to Vietnam.
Similarly, when South Korea deployed U.S. THAAD missile defense sys-
tems over Chinese objections in 2016, Beijing tightened the screws. The
CCP banned Chinese tourists from visiting South Korea and shut down a
successful South Korean supermarket chain on the mainland.34 The gambit
worked in showing Seoul that there would be costs to crossing the CCP, but
it was also somewhat self-​defeating to Beijing’s long-​run strategy of trying
to peel off America’s allies in Asia. Increasingly, South Korean officials are
willing to speak openly about the threat they face from China.
The BRI is a major effort that the United States must take seriously, but as
a Chinese grand strategy (which is how some in the West describe it), it leaves
something to be desired. The CCP is almost certainly inflating the numbers.

The People’s Republic of China 189

China has not and likely will not spend anywhere near the advertised amounts
on the initiative. Moreover, BRI is an economic loser for China. The best way
to understand it is not as an economic strategy, but rather as a means for China
to use its vast economic resources for strategic purposes to win over countries
along the old Silk Road. Furthermore, BRI is in part a sign of Chinese weak-
ness, not strength. Boxed in from expanding in the East by America and its
allies, the expansionist CCP had no choice but to look west to Central Asia.35
It is betting big on countries that were not central in the U.S.-​led interna-
tional system. But the idea that China is going to win great power competi-
tion by forging closer relationships in Central Asia seems a bit implausible.
Further, China’s heavy-​handed autocratic approach to BRI is already
turning away potential partners. The investments have not provided the
hoped-​for economic development for many host nations because China brings
in Chinese firms and guest workers instead of relying on local contractors and
laborers. These practices and others are fueling a backlash in some BRI coun-
tries. There were major anti-​China protests, for example, in Kazakhstan in
2016 and Kyrgyzstan in 2019.
In addition, after witnessing the Sri Lanka debt trap episode mentioned
above, many nations have awoken to the fact that Chinese loans come with
strings attached. To be sure, some are still attracted to the lure of brand-​new
ports and highways. And infrastructure in much of Asia is badly needed. But
governments are now approaching the Chinese with eyes wide open. The
Malaysian government, for example, has declined BRI investments, citing
the Sri Lankan example. And a newly elected democratic government in Sri
Lanka is attempting to renegotiate terms with China.
The growing backlash against China has also spread to Europe. Just a few
years ago, European colleagues were pleased with the economic opportunities
provided by Chinese trade and investment, but now they are coming to ap-
preciate the dark side of Chinese money. The European Union has protested
China’s unfair trade practices. While some European countries have installed
China’s 5G infrastructure, others have already banned it. Militarily, France
and Britain have joined the United States in conducting naval freedom of
navigation operations in the South China Sea to challenge China’s claims of
sovereignty in the area. In March 2019, French President Emmanuel Macron
declared that the “time of European naïveté” toward China is over. And in
April 2019, an EU document declared for the first time that China should be
treated as a “systemic rival.”
China’s efforts to cultivate soft power have not been very effective either.
In a recent ranking of global soft power, China came in twenty-​seventh of
thirty nations.

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 The West is also catching on to, and combatting, China’s “sharp power”
efforts. While there was serious debate in Australia just a few years ago
about how to deal with China, there is now a broad consensus that China
is a problem and Australia needs a tougher approach. The U.S. Department
of Defense has just announced that it will no longer provide Chinese lan-
guage scholarships to universities with Confucius Institutes. From now on,
U.S. universities will need to choose if they want their Chinese language
programs funded by the USG or the CCP, but they cannot have both. This
may be a prelude to even tougher measures to protect democratic societies
from China’s malign influence campaigns.
In short, China’s efforts to win friends and influence people suffers from
Beijing’s autocratic politics. The National Bureau of Asian Research reports
that “it will be increasingly difficult for the [Chinese] government to prevent
its domestic record on political and civil freedoms from affecting China’s in-
ternational credibility.”
The free nations of the world will be unlikely to trust an autocratic
country to lead on the global stage.

China’s Autocratic Military

China’s military expansion has eroded the U.S. military edge in Asia, but
theory and history suggest that autocracies have disadvantages in defense and
national security. Viewing the competition through the democracy-​versus-​
autocracy lens sheds new insights on China’s military liabilities.
Geographically, China is hemmed in by several island-​chains made up
mostly of U.S. allies. To project power much beyond its borders, therefore,
China will need allies and partners, but, as reviewed earlier, Beijing is doing
more to antagonize its neighbors than to win them over. It is surrounded
by hostile, democratic neighbors, including Japan, India, and Australia. If
it comes to World War III, the United States may be able to draw on up
to thirty formal treaty allies that combined make up roughly 60 percent of
world GDP. A World War III would be messy and hard to predict, but the
pre-​bout tale of the tape suggests the U.S. formal alliance system is more
powerful than anything China could hope to put together.
Moreover, even though China is purchasing new military hardware, there
are doubts about China’s ability to employ its newly acquired military kit
in battle. The United States military has been battle hardened from over a
decade of war, but the PLA’s last international conflict was with Vietnam in
1979. Experience matters, and it is simply unclear how the PLA will be able
to function in combat.

The People’s Republic of China 191

 Moreover, autocratic politics are also undermining PLA effectiveness. To
ensure loyalty, the CCP maintains absolute party control of the military. The
PLA devotes much of its soldiers’ schedules to “political work,” or Communist
Party indoctrination.36 President Xi calls this “political work,” the “lifeline”
of the army, but this is valuable time that is not being devoted to training
and exercising. Furthermore, PLA military units are each assigned a minder
from the Party, which potentially confuses lines of command and control. In
addition, the PLA demands strict obedience to orders, and it is unlikely that
lower-​level PLA officers will be willing or able to improvise on the battle-
field. It is much safer to wait for orders from above than risk being charged
with insubordination. No plan survives contact with the enemy, and PLA
soldiers will be paralyzed without a plan. The PLA may be fine in the early
stages of a tightly controlled military engagement, but it is hard to imagine
it doing well once the chaos of war descends.
This is a problem the Party understands. In 2015, the CCP promulgated
the “five incapables,” stating that some officers cannot: judge situations, un-
derstand higher authorities’ intentions, make operational decisions, deploy
troops, nor deal with unexpected situations.37 This is a major problem for
any military.
The PLA occasionally publishes a “Science of Military Strategy,” which
functions as a rough equivalent to the U.S. National Defense Strategy.38
What is most striking about the latest Chinese document is the pervasive
belief that warfare must be strictly controlled. Signals will be clearly sent to
the enemy and interpreted. The PLA will exert control to carefully escalate
or de-​escalate the conflict. This unrealistic view of war stands in stark con-
trast to Western notions of “the fog of war.” When one better understands
the personnel limitations of the PLA, however, it is understandable why the
Chinese would want to believe that war can be carefully controlled. If not,
they cannot win.
Like Russia and other autocracies, China struggles with many high-​end
military technologies. At a major air show in China in November 2018,
China showcased its new J-​20 fighter aircraft. It would have been an impres-
sive feat, except for the fact that the Chinese planes had to fly with Russian
engines because the Chinese-​built motors did not work.39
The United States deployed its first stealth bomber in the 1980s. The
PLA has been working on its own stealth aircraft since that time, but only
managed to take its first plane to Initial Operational Capability (IOC) in
2017.40 Moreover, the plane has not been tested against sophisticated air
defense systems and questions remain about whether China’s plane truly
possesses stealth capabilities or not.

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 China’s struggles with military technology extend to a capability the
United States mastered over a half century ago. To maintain a secure, second-​
strike capability, the United States deploys nuclear weapons on submarines
at sea on continuous deterrent patrols. It also arms its intercontinental
ballistic missiles (ICBMs) with nuclear warheads, so they are ready to be
launched on a moment’s notice (this is why U.S. ICBMs are referred to as
the “minutemen”). But China has never felt comfortable deploying nuclear
weapons on missiles or submarines. Rather, it places its nuclear warheads in
central depots with the idea that it would upload its missiles in the event of
a crisis or conflict.41 There is a political logic to this decision. It is easier to
ensure strict command and control over nuclear warheads if they are kept in
a few central locations. But it also undermines their military utility, rend-
ering China more vulnerable to an American or Russian disarming first
strike. Indeed, China placed its first nuclear-​capable submarine in the water
in 1986, but still at the time of writing, over thirty years later, does not con-
duct regular deterrent patrols.42 China simply does not trust its officers to
go to sea with nuclear weapons. Moreover, Chinese submarines are noisy and
the PLA fears they may be vulnerable to sophisticated U.S. anti-​submarine
warfare. Indeed, according to Chinese colleagues, part of the rationale for
China’s island-​building strategy in the South China Sea is to provide a “bas-
tion” where China’s nuclear submarines can remain protected. But, as with
Russia’s bastion strategy during the Cold War, the United States will likely
be able to hunt Chinese submarines if they are bottled up in a small bastion.
Once again, this is an example of how the limitations imposed by China’s
autocratic system are undermining its military effectiveness.
China is paranoid that the United States possesses an effective nuclear
first-​strike capability, and they worry greatly about the survivability of their
deterrent. China refuses to engage in nuclear arms control talks with Russia
and the United States. Beijing’s stated reason for this reticence is that their
arsenal is much smaller than the superpowers’ so there is nothing yet to dis-
cuss. I suspect that the real reason is that they fear that greater international
transparency about the size and location of their nuclear forces (which is nec-
essary for an effective arms control agreement) will make them even more
vulnerable to an enemy attack.
Proponents of autocratic advantage theory state that autocracies can
make long-​term plans and stick to them. But, theory and history suggest
that autocracies are erratic strategic decision-​makers. What does the ev-
idence say in China’s case? China bounced all over the place under Mao.
Things were pretty stable after Deng, but Xi threw away Deng’s dictums
and his new, aggressive foreign policy is generating a sizable backlash.

The People’s Republic of China 193

Perhaps the CCP will be able to course-​correct, but autocracies are not
great at self-​reflection. Moreover, China’s mistakes in recent years have
been fairly modest, but, given Xi’s centralization over the system, he may
only be days away from big, bold, top-​down decisions that have cratered
autocratic powers in the past. Moreover, the plans often cited as evidence
of China’s farsighted vision, BRI and Made in China 2025, were only
announced in 2013 and 2015, respectively. We should give them at least
a few more months before we put them in the pantheon with deterrence
and containment or the U.S.-​led, liberal international order, as examples of
successful long-​term strategies.
The most fundamental weakness in China’s military forces, however,
is the one shared with autocracies as far back as ancient Sparta: the need
to “omni balance.”43 Due to real risks of domestic political instability
and insurrection, China spends more on domestic security than on for-
eign security.44 And the imbalance has been increasing in recent years. It
is a world leader in AI technology, but instead of developing killer robots,
or other capabilities that would directly threaten U.S. allies and forces,
Beijing is leveraging it for facial recognition technology to track potential
troublemakers at home.
Moreover, China is devoting significant resources and generating an inter-
national backlash in order to lock up its Uighur population in “re-​education
camps.”45 And, as we discussed earlier, when the CCP worries about domestic
instability, it seeks external accommodation.
Finally, there is the very real possibility that the CCP could collapse to-
morrow. In 2019, widespread protests broke out in Hong Kong as citizens
rejected the CCP’s growing authoritarian influence after having enjoyed
freedom under more than a century of British rule. Autocratic regimes are
most vulnerable at times of leadership transition and by eliminating the
CCP’s institutionalized succession procedures, Xi has virtually guaranteed
that the only way he leaves office will be in a coffin. Indeed, Xi’s widespread
crackdown on political opposition is not the behavior of a man secure in his
rule or confident in the stability of his system. The end of the CCP could
mean a new Chinese civil war and another major change in China’s foreign
policy orientation, contrary to the canard that autocratic systems are more
stable or better at selecting and prosecuting long-​term strategies. A CCP
collapse, like the end of the Cold War, could mean the end of the con-
temporary China challenge and a renewed global respite from great power
competition.
In sum, the CCP is more fearful of its own people than of the Pentagon,
and this will limit its ability to become a global military superpower.

194   T h e D e m o c r at i c A d va n ta g e T o day
Democracy versus Autocracy
China has arguably been a major power for thousands of years and, if the
country manages to hang together, it could be a major power thousands
of years hence. Its economic growth over the past several decades has been
nothing short of remarkable. And there is no doubt that the growing dip-
lomatic and military challenge it presents to the United States and its allies
must be addressed with the utmost seriousness.
At the same time, we should understand that a China led by the CCP is
unlikely to become the world’s leading state. Its Marxist-​Leninist model is
not well suited to building a world-​beating, innovative economy, to win-
ning friends and allies around the world, or to constructing a lethal military
force with global power-​projection capabilities. China’s autocratic system has
undermined its competitiveness before, including under the Qing dynasty
and Mao’s CCP. China did better when it followed Deng’s liberalizing eco-
nomic guidance, but it is reverting to its old form of dysfunctional authori-
tarianism under President Xi.
Provocatively, the analysis in this chapter suggests that Taiwan’s island
democracy may actually have an even brighter future than a mainland China
controlled by the CCP. This might seem preposterous at first blush given
the relative sizes of these countries today, but let us review the historical
record. Few would have predicted that the Venetian Republic would sack
the capital of its former autocratic imperial master, the Byzantine Empire.
No one expected the Dutch Republic to defeat its authoritarian overlords in
Madrid. And the United States was an underdog to become the most pow-
erful country in the history of the world when it was a mere colony of the
British Empire. Small democratic upstarts have a history of overawing their
former imperial masters and becoming global powers in their own right.
Perhaps the same future awaits Taipei and Beijing.
In the end, there are only three likely futures for the CCP that will be
explored in greater detail in this book’s conclusion: reform, stagnate, or col-
lapse. But a world run by the CCP is not in the cards.
Rather, the country best positioned to be a true global leader for the next
several decades is the same country that has led the way for the past seventy-
five years. That country is the subject of our next chapter.

The People’s Republic of China 195