Why China’s ‘Rise’ May Have Already Peaked

If one were to pose this question a few years ago, he would probably be laughed out of the room. The conventional wisdom then was that China's rise was certain to continue. But today, this question is very much on everyone's mind.

(snip) it may be reasonable to argue that the Beijing Olympics in 2008 symbolically marked the peaking of Chinese power. Everything began to go downhill afterwards. Caught up in the global economic crisis, the Chinese economy has never fully recovered its momentum. To be sure, Beijing's stimulus package of 2008-2009, fueled by deficit spending and a proliferation of credit, managed to avoid a recession and produce one more year of double-digit growth in 2010. For awhile, Beijing's ability to keep its economic growth high was lauded around the world as a sign of its strong leadership and resilience. Little did we know that China paid a huge price for a misguided and wasteful stimulus program. The bulk of its stimulus package, roughly $1.5 trillion (with two-thirds in the form of loans from state-owned banks), was squandered on fixed-asset investments, such as infrastructure, factories, and commercial real estate. As a result, many of these projects are not economically viable and will saddle the banking system with a mountain of non-performing loans. The real estate bubble has maintained its froth. The macroeconomic imbalance between investment and household consumption has barely improved. Today, Chinese economic policy-makers are hamstrung in trying to revive economic growth. The combination of local government indebtedness, massive bad loans hidden in the banking system, anemic external demand, and diminishing returns from investments has made it all but impossible for Beijing to use the same old economic playbook to fire up the economy.

How a toxic mix of economic, demographic, environmental, political, and international challenges could end China's ascent .... Behind these developments is a fundamental crisis of legitimacy of the current regime.

I read (sometimes) Chinese newspapers. Societal unrests are under reported, and (almost) never mentioned in the Western sphere.

Generally the standard living has improved but there are deep chasm between the new upper middle class and rural peasant (farming) class. Only because of the tight central ruling party control that they still maintain current stablity.

However, do not underestimate China and its people, I don't think China needs to be the superpower like US on world stage. She can and would rather prefer controlling world events and other superpowers, while maintain her 'developing nation' façade.

I don't think China needs to be the superpower like US on world stage. She can and would rather prefer controlling world events and other superpowers, while maintain her 'developing nation' façade.

As a China-watcher who's read a fair amount of Chinese history, what sticks out is China's grabbiness with respect to territorial issues. The amusing thing is that it was a Chinese grad student who disabused me of the notion that China is a peaceful country. In a moment of candor, he said, quite logically, that big countries like China don't get that way by peaceful means. The National Review's John Derbyshire had this to say about China:

The Chinese people respond eagerly to these ultra-nationalist appeals: That is precisely why the leadership makes them. Resentment of the U.S., and a determination to enforce Chinese hegemony in Asia, are well-nigh universal among modern mainland Chinese. These emotions trump any desire for constitutional government, however much people dislike the current regime for its corruption and incompetence. Find a mainlander, preferably one under the age of thirty, and ask him which of the following he would prefer: for the Communists to stay in power indefinitely, unreformed, but in full control of the "three T's" (Tibet, Turkestan, Taiwan); or a democratic, constitutional government without the three T's. His answer will depress you. You can even try this unhappy little experiment with dissidents: same answer.
Is there anything we can do about all this? One thing only. We must understand clearly that there will be lasting peace in East Asia when, and only when, China abandons her atavistic fantasies of imperial hegemony, withdraws her armies from the two million square miles of other people's territory they currently occupy, and gets herself a democratic government under a rule of law. Until that day comes, if it ever does, the danger of war will be a constant in relations between China and the world beyond the Wall, as recent events in the South China Sea have illustrated. Free nations, under the indispensable leadership of the United States, must in the meantime struggle to maintain peace, using the one, single, and only method that wretched humanity, in all its millennia of experience, has so far been able to devise for that purpose: Qui desiderat pacem, praeparet bellum.

Every culture has a religion. The Chinese are remarkably irreligious in the conventional sense, except for a cargo cult version of paganism that should be familiar to anyone who's heard of the prosperity gospel. What passes in China for religion is a cult of national greatness - the model for Imperial Japan's world tour in the 1930's and 1940's. I believe China's neighbors are about to discover anew what their ancestors had to put up with on a routine basis before European adventurers set firm boundaries on Chinese territorial expansion 200 years ago. Our interest in the matter is the same as our interest in preventing Japan from annexing China during the pre-war era - it's never a good idea to allow an aggressive and ideologically hostile power to grow too big. More security for them means less security for us.

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