China’s ascent to prominence as a geopolitical and economic force is one of the most significant changes in the world in recent decades. The global economic, political, and security scene has changed due to China’s rise to prominence in the last quarter of the 20th century and the first decades of the 21st. Recent patterns, however, indicate that this rise might be slowing and even reversing in some ways. China’s economic downturn, demographic and sociological troubles, environmental constraints, governance problems, and the changing geopolitical landscape that may mark the end of China’s growth are all caused by various factors.
The current trajectory of China’s growth—which is not just stagnating but is undergoing a significant turnaround with enormous implications for the global order—is better understood with historical analogies, economic facts, and geopolitical analysis.
China has entered a phase of economic stagnation, demographic decline, and growing geopolitical isolation after formerly being a symbol of fast industrial progress and expanding geopolitical might. The international order and China are both significantly impacted by these changes.
Economic Reversal: A Shrinking Growth Trajectory
China became an economic superpower in a short time, challenging the dominance of the Western economic order. It was a major international trade and development engine by the 2000s, contributing more than 40% of the world’s economic growth. However, recent patterns indicate that China is no longer an economic superpower.
Stagnation in Key Metrics: Official government figures from China, frequently questioned for authenticity, show stagnation across several industries. According to independent estimates, China’s real GDP is significantly lower than what is declared, with other economic activities and electricity usage indicating a decline, reported a growth rate of 6.9% in late 2023; however, actual growth may be closer to 2% when accounting for various economic factors The ongoing negative productivity growth, which has persisted for over ten years, is a more concerning trend. The quantity of capital needed to generate one unit of GDP, or the capital-output ratio, has increased dramatically, indicating declining returns on investment. China’s growing debt, which has surpassed that of the US, is a sign of an unsustainable economic strategy and exacerbates this inefficiency.
The Debt Crisis: China’s fast-growing debt is one of the most concerning aspects of its economic stagnation. China’s national debt has grown far faster than its economy. Since the nation’s debt currently exceeds its GDP and has surged to over 300%, surpassing the debt levels of the United States, this could eventually cause financial instability. Much of China’s growth was driven by debt rather than long-term productivity increases, as much of this debt is linked to state-owned businesses and real estate developers.
Demographic Challenges: The Decline of the Labor Force
Once a major force behind China’s economic expansion, its demographics are changing in ways that jeopardise its financial health. China enjoyed a favourable worker-to-retiree ratio for many years, thanks to the one-child policy’s aftereffects, which kept the country’s workforce sizable, youthful, and productive. Now, this demographic dividend is starting to fall apart.
A Shrinking Workforce: According to UN estimates, China will acquire 130 million seniors and lose 70 million working-age adults by 2030. China’s social services will be under tremendous strain due to this drastic change, which will also significantly reduce its capacity for economic growth. China’s worker-to-retiree ratio is predicted to fall to just 2:1 by the late 2030s, drastically lowering productivity and putting further strain on the country’s already overburdened healthcare and pension systems.
Youth Unemployment and Disillusionment: The “lying flat” movement has also emerged due to rising youth unemployment when young people reject traditional aspirations after disillusioning with China’s lack of economic possibilities and social constraints. Deeper structural problems in the Chinese economy are indicated by this social ill. It reflects the rising dissatisfaction of young people, who are becoming less optimistic about their chances of success in the current system.
Environmental and Structural Challenges
The ecology has suffered dramatically as a result of China’s quick industrialisation. The depletion of natural resources like water and arable land threatens the future of China’s economy.
Natural Resource Depletion: 60% of China’s groundwater is so contaminated that it is unfit for human use, and half of its rivers have disappeared. China is now largely dependent on imports due to its overuse of coal, oil, and other natural resources. China is becoming the world’s largest importer of food and energy due to its reliance on foreign energy sources, which further strains its economy when combined with growing raw material prices.
Governance Under Xi Jinping: Under President Xi Jinping, the political climate in China has changed in favour of a more authoritarian administration. Economic dynamism has been hampered by the concentration of power, the repression of opposition, and measures like the zero-COVID lockdowns and the crackdown in Hong Kong. State subsidies and anti-corruption initiatives have suppressed innovation and entrepreneurship, essential for long-term prosperity. Policy efficiency has also been further undermined by the growing suppression of adverse economic data, resulting in a lack of openness.
Geopolitical Shifts: Rising Isolation and Tension
China’s waning worldwide influence results from growing geopolitical tensions and economic difficulties. China’s interaction with significant countries, especially the United States, has historically aided its economic integration with the rest of the world. However, China has grown more diplomatically isolated as its financial and military strength has expanded.
Geopolitical Encirclement: The geopolitical landscape surrounding China is growing more unstable. China’s economic foundation is being undermined by trade and technological restrictions enforced by the US and its allies, such as the EU and Japan. Furthermore, neighbouring nations have begun to oppose China’s expanding military presence, especially in Taiwan and the South China Sea. Notably, the United States has increased tensions and decreased the possibility of a diplomatic settlement by establishing a network of military installations around China.
Declining Global Influence: China’s global influence is likewise diminished by its economic slump. China’s faltering economy is already causing downturns in several nations that were formerly economically dependent on it. The phrase “China hangover” refers to the economic challenges many countries face due to China’s fall. The global effects of China’s financial collapse are becoming apparent, ranging from decreased exports to Chinese markets to China’s changing lending methods, which increasingly require repayments rather than providing fresh capital.
Peaking Power Syndrome
A similar pattern has frequently been observed in the decline of significant powers throughout history. A country experiences a period of stagnation or decline after its economic peak. Internal civil unrest, escalating repression, and a more assertive foreign policy posture are usually characteristics of this period.
The Risks of Peaking Powers: China’s present course is similar to the historical trend of “peaking powers.” Following periods of fast economic growth, countries like the US, Russia, Germany, and Japan had economic crises that prompted them to adopt assertive foreign policies. For example, in the late 19th century, the United States increased its power throughout Asia and Latin America. In response to economic stagnation, Japan and Germany simultaneously sought imperialistic expansion in the early 20th century.
China appears to be following this trend as well. China seems to be attempting to establish itself more aggressively on the international scene in response to its internal economic difficulties, as evidenced by its increasing military buildup, aggression in the South China Sea, and crackdown on domestic dissent.
Given the convergence of geopolitical, social, economic, and environmental challenges, the end of China’s growth is inevitable. Although the precise outcome cannot be predicted, the indications suggest that China’s trajectory is significantly slowing down, if not reversing. It appears that China’s rise will not continue at the same rate due to several factors, including an ageing population, environmental degradation, economic inefficiencies, growing domestic instability, and waning global influence.
China may be unable to maintain the global leadership position it initially hoped for, as seen by its move towards more authoritarian rule under Xi Jinping and its growing isolation on the international scene. Even if the future is unpredictable, the current patterns indicate that China’s ascent to prominence as a significant world power is ending. China is no longer the undisputed economic and political leader, and the globe is entering a new era of fierce geopolitical conflict.
This change does not imply that China will fall apart despite its importance. However, it indicates the beginning of a new age in international relations and the end of an era of unchecked expansion and worldwide supremacy. Given this, it is reasonable to say that China’s ascent to prominence as a significant world power is ending.
