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CHAPTER 7

US technology firms nevertheless worry about Chinese competition. They also fear that the wholesale cyber extraction of US intellectual property is giving China more of an advantage than it would have striving to be a tech giant on its own. Cyberattacks have grown to such an extent that they have become a political issue. Equally worrisome to US security officials is the buyout of Western firms by Chinese ones hungry to acquire the tech insights, as much as the added business and market share. To what degree China becomes innovative, without politically reforming, will be a critical test of the importance of traditional Western liberal values for prosperity and progress. So far, China has shown its ability to do very nicely without, but whether China achieves its goal of being an innovative society will be conclusive proof of the proposition, one way or another. For Chinese leaders, failure to achieve the country’s high-tech goals has more immediate and tangible implications. The Communist Party has vowed to bring China’s living standards up to the level of Western advanced countries by the anniversary of its takeover, or China’s liberation, in 1949. Continued robust growth, then, is a must. At 6-7 percent average annual growth—the current level—this is probably possible, but economies tend to slow as they develop, as China’s already has. Will it still be growing at even 5 percent when its population is aging fast, and the proportion of working-age adults begins to fall dramatically? The Economist Intelligence Unit expects China to be almost equal to Japan in per-capita income by 2050, but the spending power of Chinese consumers to be only 50 percent that of a US consumer.90 China will need to avoid the slowdown—or middle-income trap—into which many rapidly growing powers fall. A slowdown, including increasing evidence that China will not meet its level pegging target with Western economies, could undermine the Communist Party’s standing with the Chinese people. For the regime and people, the goal is also linked to their determination to undo the “century of humiliation,” when the Western imperial powers (including Japan) exploited China’s weaknesses in the nineteenth century. It is hard to overestimate the potency of that narrative. In the eyes of many in China, the legitimacy of the Communist Party is tied to the extent that it shows China is equal to or better than the other great powers.

Global Trends 2030 describes how countries often become more nationalistic and assertive as their power begins to crest. For many governments, demonstrating their importance on the world stage mitigates their loss of economic power. The report took a catholic view and applied the principle not just to China—which already in 2012 showed some signs of slowing down—but to the United States, Russia, and Japan, which were also experiencing relative losses of power. The comparison pointed to the fact that, with so many powers becoming thin-skinned about their prerogatives, the geopolitical landscape was becoming more treacherous. Historically, there were any number of past rivalries—Britain and Germany before the First World War being the leading one, and even Japan and the United States in the lead-up to the Second World War—that can be explained by at least one power in the duo fearing that its best days may soon be over, and then opting for aggression to defeat its rival before it was too late. In China’s case, the government may believe its best days are still ahead, but it needs to demonstrate to the public that others respect China. With a slowdown in living-standard increases, demonstrating China stands tall becomes even more important. For the United States, which has been the sole leading regional power, there is also a price to be paid in ceding ground. Few in the government or public want conflict with China, but US leadership does not want to appear weak. For Washington, it is increasingly important whether China or the United States sets the rules. What future would Americans have if the United States is no longer the superpower crafting all the rules? Moreover, many of China’s neighbors have egged on Washington to reinforce its security guarantees. The situation going forward is fraught with difficulty. It depends upon leadership on both sides threading a slender needle. There are increasing forces on both sides—including a nationalistic Chinese public—that see conflict as inevitable, which is a dangerous leading indicator.

90 Economist Intelligence Unit, Long-term Macroeconomic Forecasts: Key Trends to 2050 (London: Economist, 2015), http://pages.eiu.com/rs/783-XMC-194/images/LongtermMacroeconomicForecasts_KeyTrends.pdf.

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Global Risks 2035  

Authored by Dr. Mathew J. Burrows, director of the Strategic Foresight Initiative at the Atlantic Council’s Brent Scowcroft Center on Intern...

Global Risks 2035  

Authored by Dr. Mathew J. Burrows, director of the Strategic Foresight Initiative at the Atlantic Council’s Brent Scowcroft Center on Intern...