I have been travelling to China for more than three decades, but never have I encountered a Chinese leadership so uncertain of the country’s future. It is little exaggeration to say that the world’s most populous country is on its heels. The irony is inescapable: political leaders in the US and Asia are busy debating how best to meet what they see as the threat from China; political leaders in China are debating how best to meet the many threats they perceive to China.
Most of the threats the Chinese see to their country come from within. For three decades China has depended on robust growth, largely from ever-increasing exports, to maintain high levels of employment and raise living standards, thereby assuring social tranquillity.
This era may have run its course. Years of low economic growth in Europe and the US (and the prospect of more to come) have limited their ability to absorb Chinese goods. There is also increasing resistance to the country’s policy of keeping its currency at artificially low levels to reduce the cost of its exports to consumers in Europe and the US.