July 20, 2024
The trade war shows China’s economic dream is dying. Beijing now has a choice: open up or stagnate
China has stoked its people’s hopes of using economic growth to return to national greatness and reverse national humiliation, and such dreams die hard.
China has stoked its people’s hopes of using economic growth to return to national greatness and reverse national humiliation, and such dreams die hard.

For decades, China’s development path has seemed clear. State management of key industries coupled with some level of free-market liberalisation elsewhere have made it easy to imagine that the country would soon return to superpower glory.

But that will not happen now. China will have to accept a US-dominated world order or step into the slow lane. There will be no Pacific century and all those historical wrongs will not be righted, certainly not this time.

America has played its Trump hand very well. What China has achieved socially and economically over the past 40 years is remarkable by any standard. From being a poor agriculture-based country at the end of the Cultural Revolution, it has become the second-largest economy in the world. It has transformed its infrastructure by building a network of roads, high-speed railways, ports and airports.

It has lifted hundreds of millions of people out of poverty – more than any country in human history, and in barely a generation. It has constructed vast new cities, attracted trillions of dollars of inward investment and spread its influence across the world, most recently through the Belt and Road Initiative.

While it is easy to imagine that some on Capitol Hill have seen what is coming for a decade or more, it will be hard for people in China, especially among the country’s leadership, to accept that this path to glory is coming to an end. Yet China has been fooling itself, its hopes stoked by enthusiastic foreign investors, the rhetoric of local academics and the dreams of its own people.

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