EDITORIAL: Joe Biden needs a China narrative that refutes today’s political angst

Dwight D. Eisenhower’s cultured despisers, whose number was less impressive than the number of electoral votes Eisenhower reaped (899 of a possible 1,062), complained that his grin was his political philosophy. Ronald Reagan, who remained a Democrat for 10 years after he cast his first Republican presidential vote, for Eisenhower in 1952 (Reagan later won 1,014 of a possible 1,076 electoral votes), was disparaged for being a human sunrise, unreasonably cheerful about this fallen world.

Eisenhower and Reagan, however, like Franklin D. Roosevelt, knew something that, now more than ever, is germane to governing Americans: A sunny presidential disposition can be consequential. Optimism can be infectious; optimistic people stay in school, get married, have children, make investments and generally embrace the future. Joe Biden thus needs a narrative that refutes today’s political angst, which includes unreasonable forebodings about China’s supposedly ineluctable rise.

Decades of growth have propelled China’s rise from an almost entirely peasant society to one that still has an enormous peasantry. This growth, which was more rapid than can be continued, pulled China’s per capita gross domestic product to $9,770, 72nd in the world, slightly better than Mexico’s, still behind Russia’s, one-fourth that of neighbouring Japan and one-third that of South Korea, and about 15 percent of the United States’ $62,887.

The bitter fruit of China’s “one-child policy,” from 1980 until 2016, is an aging population that will become gray before it becomes rich. Last year, China’s birthrate fell to 1.05 percent, a record low (the US rate is 1.73), and China is projected to be among 55 nations with fewer people in 2050 than today. By 2030, Chinese deaths might exceed births. Today, China’s working-age population is 70 percent of the total population; it is projected to plunge to 57 percent by 2040, when there will be barely two workers to support every retiree.

In a March review for the Financial Times of two books on China’s economy, Geoff Dyer, the paper’s former Beijing bureau chief, noted that China cannot become “the first authoritarian regime to enter the exclusive club of high-income countries” unless it avoids “the ‘middle-income trap,’ where it can no longer compete on cheap manufacturing but does not yet have the skills or technology to sustain more advanced industries.”

Then there are socialism’s inevitable irrationalities: State-owned banks favouring state-owned industries is one reason China’s debt burden is more than triple the size of China’s GDP. Writing in Foreign Affairs (“China’s Coming Upheaval”), Minxin Pei of Claremont McKenna College says inefficient state-owned enterprises “control nearly $30 trillion in assets and consume roughly 80 percent of the country’s available bank credit, but they contribute only between 23 and 28 percent of GDP.”

Posters in glistening, modern Shanghai depict rays of light flowing from Chinese President Xi Jinping’s head, but he urges followers to fill their heads with the pre-modern musings of Stalin, Lenin and Mao, a recipe for economic sclerosis.

The US trajectory is different. Also writing in Foreign Affairs (“The Comeback Nation: US Economic Supremacy Has Repeatedly Proved Declinists Wrong”), Morgan Stanley’s Ruchir Sharma notes that in 2010, after the weakest decade of US growth since World War II, the nation had a full decade without a recession for the first time since at least 1850, when record-keeping began, and the US share of global GDP expanded from 23 percent to 25 percent, back to where it was in 1980, before China’s ascent began.

In the 2010s, the US stock market rose 250 percent, almost quadruple the average gains of other national stock markets. (China’s rose 70 percent.) “By 2019,” Sharma writes, “the United States accounted for 56 percent of global stock market capitalization, up from 42 percent in 2010. The value of the US stock market, relative to all others, was at a 100-year high.”

Today, “seven of the world’s 10 largest companies by total stock market value are American, up from three in 2010.” Globally, 75 percent of loans to individuals and companies are denominated in dollars, up from 60 percent before the 2008 crisis. Although technology investments, partly the result of a culture of innovation fuelled by great research universities, have been crucial, Sharma says, “the more important US advantage has been a relatively high population growth rate: babies and immigrants, not Stanford and Google.” Sharma adds: “The most important driver of any economy is the working-age population, which is still growing in the United States but started shrinking in China five years ago.”

Donald Trump says a Biden presidency would mean “China will own the United States.” Trump’s reelection would entrench his misunderstanding of both nations.