Matt,
The YouTube algo has been feeding me a LOT of stuff about 'China collapse' and 'end of globalization' that I have been looking at and reflecting upon. When I see 'doomer' stuff I tend to get skeptical, so my first reaction is to assume it is 'click-bait' but that there is probably a grain of truth there.
My current thoughts:
I tend to trust 'economists' predictions that are based upon LOTs of data from many different countries in many periods, rather than the melodramatic speculation of uncredentialed tubers. Like my current fave Noah Smith, who has written a LOT about China too (as well as demographics and renewable energy).
His (economist) take is that all countries follow an 'S'-shaped development curve for their wealth or GDP per capita. The initial part of the 'S' looks like an exponential, and all countries doing that look basically the same... rapid growth, building of infrastructure, flowing in of foreign investment. And the thing about exponentials, is that if you extrapolate them, they all go to the moon/infinity. So you could niavely take Chinese GDP/capita 2000-2010, and project that is would pass the US figure in 2030. Easy. And ofc the Chinese leadership DID do that extrapolation, and promise that to their people.
The data show that these exponentials have gotten faster over time. China's was fast, but no different from other countries that developed at the same time. This is seen as a feature of technology. Newer tech is faster to deploy and more productive than tech from 50 or 100 years ago. It has nothing to do (apparently) with the virtues (like work ethic or savings) of the people doing the development or how skilled the managers are. Tech adoption speeds have just gotten faster. Think iPhones versus washing machines.
But economists know that that exponential growth never continues forever. Instead, at some point the S curve rolls over, and the GDP/capita plateaus, with a growth rate that looks like a developed country (a couple percent per year). Here there ARE variations by country, some countries like Japan and S. Korea plateau at a rather high level (a significant fraction of the US level) and others kinda fizzle out and plateau at a low level. A country kinda in the middle is Poland. Poland is waaay richer than it was 40 years ago, but it is still like a third of the US level. And growing slowly with stable investments.
The economists have shown that where a country ends up DOES depend on management. Especially freedom from corruption and oligarchy. If money starts getting skimmed into pockets during the go-go exponential phase, or a lot of mal-investment happens (like bridges to nowhere) then eventually that DOES catch up with the country, and they are less well off when the party ends. The success of Japan is that they have relatively low levels of corruption, and followed a US model very closely.
So where does China come out? The exponential growth 2000-2010 started to level off in 2010, and it is now possible to 'fit' the Chinese data to the 'S' curve that describes these processes, and project where they will plateau. And the answer is... Poland. Not as rich as the US per capita by a long shot. And lagging both their Japanese and Korean neighbors. A BIG populous country with a little more wealth per capita than they have now, but that's it. They're not going to eclipse the US. Period.
The 'China threat' is a paper tiger.
That's economics. There is no way they can do 'better' than that. The Poland projection says that their management of development has been 'about average' compared to other countries, both in its speed and its final wealth asymptote. This development was a HUGE win for humanity... pulling 1 billion people out of poverty. Wow! Go China!
But compared to the promises and aspirations of the CCP, this is a HUGE shortfall. They are promising their people (and getting political capital) that China will take over the world economically (and militarily), that the US/EU are in terminal decline, and that THIS is inevitable... based upon a bogus projection of exponential growth (that has to fudge the data since 2010). I think wealthy elites in China (many with MBAs from Wharton) understand that this will not end well, and so have escape plans set up to the EU/US/Canada for they and their families. And political leaders know that a democratic process will bring a reckoning for them... and so are turning to authoritarianism and misinformation to stay in power. There is no other way, and this is a story as old as time.
How will it shake out? That's politics and hard to predict. Will they be able to manufacture most of the worlds crap for the next 10 or 20 years? I wouldn't bet on it. This is why the US has a $$$ crash program of 'reshoring' and 'friend-shoring' critical supply chains in all those Biden Bills passed over the last year. Its not protectionism or populism... its Natl Security.
