Professor Michael Beckley presented an engaging discourse on China at the World Knowledge Forum, addressing the potential deceleration of the nation’s economic growth. He attributed this trend to several critical factors, including resource scarcity, demographic decline and domestic policies that inhibit the private sector. Furthermore, the progressively hostile international landscape is exacerbating China’s economic condition.
The economic deceleration in China appears to be particularly impacting the youth demographic. The “lying flat” (躺平) phenomenon denotes a societal movement that arose as a reaction to the escalating pressures of living. The phrase gained prominence in 2021 as numerous young individuals articulated their discontent with the intensely competitive labor market, elevated living expenses and unattainable societal expectations.
This circumstance indicates that China faces difficulties that ultimately affect the domestic and international spheres. This condition reportedly prompts Chinese to transfer their funds overseas illicitly. According to the Wall Street Journal, this substantial shift of wealth has amounted to almost US$254 billion. Chinese employ various methods to transfer their funds overseas, including establishing shell companies abroad for family members, purchasing cryptocurrencies and converting them to US dollars, and auctioning artworks abroad while retaining the proceeds outside of China. They were compelled to undertake this action to evade governmental capital regulations. The Chinese government enforces stringent regulations about foreign capital flows, instituting a policy that restricts individual foreign exchange purchases to a maximum of US$50,000.
The author is concerned that nations reliant on Chinese trade and investment are seeing significant difficulties due to economic deceleration. Beckley refers to these phenomena as a “China hangover,” indicating that reliance on the Chinese economy has become a liability for other nations, resulting in geopolitical and economic problems. Consequently, China would intensify domestic repression and adopt assertive actions internationally to preserve its status. This might encompass endeavors to augment its military and economic dominance, particularly in regions like Taiwan and the South China Sea.
It is logical to conclude that China’s apparent assertion of its ego, which contradicts international law, particularly concerning Taiwan and the South China Sea, stems from its domestic economic crisis, necessitating new avenues for financial stability. Consequently, the expansion of China in the South China Sea and its endeavors to incorporate Taiwan as part of its territory would persist unabated.
This situation poses a significant warning for the international community, as nearly all nations exhibit a reliance on China. Consequently, China’s policies, including the Belt and Road Initiative and others, might inadvertently serve to exploit the resources of its partner countries, as evidenced by the experiences of Sri Lanka and Laos.
Conversely, Beijing continues aggressively leveraging external advantages via trade with developing nations, particularly in Asia and Africa, to diminish reliance on traditional markets that are more susceptible to global trade tensions. Additionally, China is endeavoring to recalibrate trade relations with other major countries through agreements such as the Regional Comprehensive Economic Partnership, which encompasses the Asia-Pacific nations.
M. Syaprin Zahidi is senior lecturer in the Department of International Relations at the University of Muhammadiyah Malang and is a doctoral student at Ghazali Shafie Graduate School of Government at the Universiti Utara Malaysia.
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