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A middle school instructor teaches Chinese poetry to seniors at a social welfare center in Hangzhou, China. (EPA/Yonhap News)

It’s in the nature of human beings, and countries, to want to be at an advantage over others. In that sense, history may be seen as a record of competitions for dominance.

Another heated battle for dominance is unfolding today. We see signs of it in the conflict between the US and Russia over Ukraine.

An even more intense competition is taking place between the US and China. In terms of economic might, China has reached a level where it poses a threat to the US. Dominance is decided as much by economic power as by military strength.

It’s natural for the US to feel threatened by China’s pursuit. But some Westerners’ claims that China is poised to surpass the US should be seen as exaggerated. China has more weaknesses than people realize.

China is a massive country. As of 2020, its population was counted at 1.41 billion. In terms of population, China is over four times larger than the US, which has around 330 million people.

Gross domestic product (GDP) is calculated by multiplying productivity by the population. A higher population is clearly an advantage for a higher GDP. That fact serves as the basis for most of the predictions that have the Chinese economy poised to surpass the US economy in view of past growth rate trends.

But those predictions are mere conjecture, which fails to take into account qualitative aspects related to the population. In China’s case, the qualitative aspects of its population are starting to have a negative impact on growth.

In many countries, the pandemic served as a mechanism lowering the birth rate.

When entire families are forced to remain at home, that translates for most households into greater fears for the future. As financial difficulties are factored in, stress levels escalate even further. It’s not the sort of climate that would put anyone in the mood.

China’s disease containment measures have been particularly extreme in comparison with other countries. People are barred from going outside at all. This inevitably leads to greater stress for households. Under the circumstances, the chances of the low birth rate rebounding are effectively zero.

The decline in China’s birth rate dates back to before the pandemic. The country abolished its one-child policy in 2016, but that alone is not enough to boost the birth rate.

Simply changing the laws is not going to instantly wipe away memories of decades of education instructing people that they were only allowed to have one child, with punishments for those who violated the rule. The total fertility rate, which represents the average number of children that a woman of childbearing potential (aged 15 to 49) is expected to bear over the course of her life, remains down at 1.3.

The situation has only gotten worse during the pandemic. According to the National Bureau of Statistics of China, around 10.6 million children were born in China in 2021. That’s compared to around 12 million in 2020 — showing that the various incentive measures haven’t been effective.

For 2021, the number of births and deaths was roughly equivalent. Without people coming in from outside, China is poised to shortly face a population decline.

A declining population doesn’t necessarily spell doom for GDP growth. You can still achieve growth through increased productivity.

The problem arises when the population decline occurs in tandem with an aging population. In this case, senior citizens leave the labor market faster than young people arrive to take their place.

It’s a problem that a lot of countries are facing, and it’s especially noticeable in China. Unless “Xi Jinping’s China” can solve it, a scenario where China surpasses the US may be unlikely.

In January 2022, police stand guard outside of Evergrande’s offices in Guangzhou amid protests by people calling for their money back. (Reuters)

Even without the US reining it in, China is unlikely to surpass the US. The reason has to do with its lack of soft power.

Soft power can be seen as the finishing touch on a country’s dominance or standing. You can’t assume control of the world unless you can dominate through cultural products.

At the moment, US cultural products are in a league of their own, circulating all around the world. Even in the 21st century, the US remains massively influential with its films and television series.

What about China? Despite its long history and time-honored traditions, it has produced nothing to boast about in terms of cultural products.

China may have the economic might to threaten the US, but in terms of soft power, it is still in its infancy.

Over the four decades since it implemented reforms and openness, it has achieved global success with exactly two of its cultural products: Liu Cixin’s science fiction novel “The Three-Body Problem” and the short-form video service TikTok. Even those successes can only be viewed as partial.

“The Three-Body Problem” won Liu the Hugo Award in 2015 — an honor that could be called the Nobel of science fiction. He was the first Asian to achieve that.

Without question, the book is a work of genius. But its success is still only within the narrow confines of the science fiction genre. Not only has it failed to broaden its base, but the follow-ups have been underwhelming.

We see a similar situation with TikTok. Owing to a lack of Chinese content, it hasn’t served as a window for distributing culture.

Among Asian countries, soft power has been growing by the day in South Korea, Japan and Taiwan.

South Korea’s popular music, films, and television series have joined the ranks of the world-class. Japanese animation remains influential as well.

Yet China, a country seen as synonymous with Asian civilization, has yet to develop soft power. The reason for that is self-evident: the state itself clamps down on creativity.

“The Three-Body Problem” was able to gain worldwide acclaim thanks to celebrities who actively promoted the book in various media. This is unimaginable in China right now. Chinese authorities thoroughly regulate speech unrelated to patriotism or everyday life. When channels of speech are obstructed, creativity dies out. Though Asian culture is now widely consumed in the West, Chinese culture’s share of the market is minimal at best.

China clearly has a rich and lively culture. The problem is its government, which isn’t very interested in encouraging or enhancing cultural activity within its borders. The Chinese government believes information hinders stability. Under such circumstances, the promotion of Chinese culture abroad becomes a complicated matter. The Chinese government also partially blocks the influx of foreign cultural products into China. It’s only natural that Chinese culture is enjoying diminishing opportunities to globalize.

Aside from censorship, indifference is another factor that’s further isolating Chinese culture from the world. China’s insistence on doing everything the Chinese way itself is causing the country’s soft power to languish. This in turn has inevitably led to the decline of the competitiveness of China and its companies.

Astronomical debt and severe inequality are other main factors impeding growth for China. While the latter is a big problem in and of itself, the bigger problem is that China is attempting to solve the issue of inequality through force. The country’s push for “common prosperity” will ultimately undermine its growth potential, as it will surely hurt the vitality of Chinese corporations. Private enterprises in China are rapidly becoming public under state control.

Though the country’s authorities dream of realizing Chinese-style capitalism, such an approach may weaken entrepreneurship and temper the competitiveness of Chinese businesses in the long run. While the approach can effectively foster growth in fledgling industries, it will negatively impact industries that call for creativity and a daring spirit.

Though China is attempting to redesign its economic and financial systems without destabilizing its society, it’s unclear whether this can be done without any changes in its governing system, the fundamental source of inequality in China. Chinese President Xi Jinping must simultaneously accomplish two seemingly contradictory goals, the very goals that past Chinese leaders strived to realize for centuries: growth and equality. Unfortunately, the path to these destinations is long and winding, and inequality is only worsening in China.

Debt is another serious problem in the country, especially that of local governments. The real estate market, comprising 30% of China’s GDP, was what mainly powered the Chinese economy. But the debt explosion triggered by the bankruptcy of the China Evergrande Group may end up affecting local governments, who up until now made up for budgetary deficits by selling land to real estate developers. Now, this has become impossible. The finances of local governments will slowly deteriorate, and regional disparity will intensify. The conflict between the wealthy coastal region and the poor western region may come to light and lead to social unrest.

The Chinese government has designated zero COVID, economic growth of 5%, and debt reduction as its three main policy objectives. Already, the last goal is falling by the wayside due to concerns that austerity measures for the purpose of debt reduction and stabilization will cause economic stagnation.

That being the case, will China be able to achieve its other two goals?

China’s zero-COVID policy has been put in jeopardy due to the emergence of the highly transmissible Omicron variant. Because of China’s track record of low caseloads, only a small number of Chinese people have developed natural immunity against the COVID-19 virus. The effectiveness of Chinese vaccines is also questionable.

Rigid lockdowns for the sake of zero COVID transmission are impediments to growth in and of themselves. If lockdowns fail, China may be subject to the kind of economic chaos that swept the world early in the pandemic. Countries around the world are suffering from the consequences of COVID-19 — China won’t be the exception for long. What’s meant to happen is bound to happen. Will China be able to achieve a 5% economic growth under these circumstances?

It was once projected that Japan, which entered the ranks of wealthy nations before becoming an aging society, would outpace the US in terms of its economy. This turned out to be a mere pipe dream. What then of China? China’s population is already aging when the country has yet to accumulate much wealth. Astronomical expenses will be needed to make sure its aging population doesn’t tip China into social unrest. The cost may be too much for China to handle.

To make matters worse, Xi Jinping is pressuring corporations, the backbone of economic growth. More importantly, China can no longer boast low-cost labor as its strength. The country is losing its competitive edge in labor-intensive industries. But this doesn’t mean the country has become competitive enough in high-tech industries with high added value. These factors can all contribute to social instability.

Considering all this, it’s baseless, wishful thinking to imagine China coming out victorious in its race against the US. The above-mentioned issues must be resolved for China to gain an upper hand in its competition with the North American powerhouse. Whether China is capable of overcoming these challenges under its current governing system is open to doubt.

There are limits to the ruling class’s ability to better itself. The solution has to be structural. But to expect this of an unchecked power is in itself a contradiction. Then, it’s clear what the outcome will be of the hegemonic competition between the US and China. Pax Americana may continue on longer than one might think.

By Yoon Seok-cheon, finance columnist

Please direct questions or comments to [english@hani.co.kr]