During President Joe Biden’s address to the nation about his withdrawal from running for re-election this week, he claimed one of his foreign policy accomplishments was that China’s economy was no longer on pace to surpass the U.S. economy. The truth is the Biden administration’s China policy has been a failure and China’s economic decline has been self-inflicted.
Many people have been conditioned to think China would soon surpass the United States as the world’s dominant economic power. But that scenario seems less likely now due to Chinese leader Xi Jinping’s economic policies.
Deeply suspicious of entrepreneurs and economic reform, Xi has deliberately forced China back toward the socialist economic model envisioned by Mao by placing the Chinese Communist Party and himself in the driver’s seat and managing China’s economy through central planning. Xi also prioritizes national security over economic growth and values loyalty to him over competency.
Minxin Pei, a Claremont McKenna College professor and well-known China watcher, pointed out: “Xi’s centralization of power has caused a crisis of confidence in China’s economy not seen since 1978, after Mao Zedong’s death.” Consequently, China’s economic growth rates have started declining from double-digits in the ’90s and early 2000s to single-digits since Xi took control in 2013, long before Biden became president of the United States.
Investors and Intervention
China’s economic woes have deepened in recent years due to several factors. Xi’s crackdown on tech companies and the unsettling “disappearances” of prominent Chinese tycoons have not only dampened entrepreneurial spirits but also inflicted billions of dollars in losses on investors.
More importantly, it has eroded confidence in the Chinese market, leading to a significant outflow of funds from China as foreign firms and investors find it increasingly challenging to make profits in Xi’s China.
Xi’s intervention in China’s property market has also had a profound impact, resulting in the collapse of Evergrande, China’s largest property company. This has left hundreds and thousands of housing projects unfinished and caused a rapid decline in housing prices and demand. Given that most Chinese people’s household wealth is tied to housing, this crisis has significantly undermined consumer confidence and increased the risk of deflation in China.
Youth Unemployment and Demography
Xi’s “zero Covid” policy, which was abruptly ended after anti-government protests erupted in late 2022, has inflicted significant damage on China’s economy and, more importantly, on the well-being of its people. For three years, it subjected businesses and millions of people to harsh lockdowns. The youth unemployment rate soared to 22 percent in June 2023, prompting Beijing to cease publishing the data out of fear of causing public panic.
Furthermore, the nation’s long-anticipated demographic crisis has arrived sooner than expected, as Beijing revealed the Chinese population declined for the first time in decades. All these factors have led to China’s economic growth being limited to a mere 3 percent in 2022, its worst level since 1976.
According to The Wall Street Journal, “China’s gross domestic product, which was 75% the size of the U.S.’s in 2021, had slipped to 64% in the third quarter, 2023, roughly where it was in 2017.” This indicates China’s economy is no longer on track to surpass the U.S. economy, as many had predicted.
Biden’s Failed Policy
Clearly, China’s economic woes are self-inflicted and not caused by the Biden administration’s China policies. In fact, the Biden administration’s China policy, which often lacks clarity and is full of contradictions, has largely failed.
The Biden administration extended some of the Trump administration’s policies, such as adding Chinese companies to an economic blacklist over alleged human rights violations. Yet, during her visit to China last year, U.S. Commerce Secretary Gina Raimondo urged American businesses to keep investing in China.
The Biden administration pats itself on the back for restricting semiconductor chip exports to China. However, the chip export restriction has not been strictly enforced, and China still has access to Nvidia’s advanced AI chips, according to the Wall Street Journal.
Biden’s green initiatives have been an economic gift for China and only deepened the U.S. economy’s dependency on the Communist regime since China dominates the global supply chain for solar panels, wind turbines, and batteries for electric vehicles due to its willingness to exploit slave laborers (most are ethnic minorities) and the nation’s abundant supply of coal.
On the issue of Taiwan, President Biden publicly asserted three times that the U.S. military would defend Taiwan if China invaded the island. However, each time, senior White House staff contradicted the president’s remarks, leading to confusion and uncertainty. After Biden declared that he was open to détente with Beijing, China’s People’s Liberation Army (PLA) responded with aggressive maneuvers in the South China Sea and inflammatory rhetoric that belittled the United States and its allies, while often refusing to even pick up phone calls from their U.S. counterparts.
It is also important to note that while China’s economy continues to struggle, its military capability continues to expand. For instance, the 2023 China Military Power Report produced by the Department of Defense estimates that the Chinese had more than 500 operational nuclear warheads as of May 2023, and the PLA continues to “quite rapidly” modernize, diversify, and expand its nuclear, space, and cyberspace.
China has also increased its geopolitical aggressions under Biden’s first term. Despite the U.S. and its allies’ repeated pleas, Xi’s ongoing economic and military support of Russia has helped sustain Putin’s invasion of Ukraine. In this year alone, China had sent 233 Chinese military aircraft, 110 naval vessels, and dozens of spy balloons around Taiwan by the end of January.
In May, China’s coast guard used water cannons, military-grade lasers, and other aggressive tactics to try to stop the Philippine resupply and patrol missions to the Second Thomas Shoal in the South China Sea, damaging Filipino boats and injured crews.
Probably emboldened by Biden’s mental and physical decline, Xi seems to feel comfortable bringing a new Cold War to America’s doorstep. Last February, a Chinese spy balloon floated across most parts of the continental United States for days before the Biden administration finally shot the balloon down.
Recently, a D.C.-based think tank reported that China has likely upgraded and expanded its spying facilities in Cuba. This week, on the same day that President Biden delivered his Oval Office address, Russian and Chinese warplanes were reportedly intercepted by U.S. and Canadian fighters near the coast of Alaska. U.S. officials said this was the first time “strategic bombers from the two U.S. adversaries have operated together near North America.”
All of these examples cast doubt on President Biden’s assertion that his China policy was a success. Since Vice President Kamala Harris has claimed to have worked closely with Biden in the last three and half years, and she is the Democratic Party’s presumed presidential nominee, her record on foreign policy, especially on China, deserves thorough scrutiny between now and election day.
