China left grappling with balance of power shifts

Pendulum has swung back to the United States after Beijing’s chaotic Covid exit and economic fallout

Balance of power shifts, sometimes quickly and dramatically.  

Three years ago, President Xi Jinping introduced the concept “The East is Rising, the West is Declining” to signify that China, having risen and rejuvenated, was poised to supplant the declining Western civilization, represented by the United States. 

President Xi Jinping had ample reasons for his confidence. 

By then, China had navigated through the turmoil and trepidation of the coronavirus outbreak, establishing itself as a new safe haven for those escaping Covid-19. 

While other countries still grappled with the pandemic, China stood out as the only major economy to post positive economic growth in 2020. 

This upward trajectory extended into 2021, with the economic growth rate climbing to 8.4% – marking the fastest expansion in a decade. 

Mask diplomacy

Bolstered by the pandemic’s containment and swift economic recovery, China began to augment its soft power and international influence by promoting the “China solutions” to the pandemic and practicing “mask diplomacy” and “vaccine diplomacy.” 

Until the fall of 2021, China was the world’s biggest Covid-19 vaccine exporter. 

According to a survey conducted by the Singapore-based ISEAS-Yusof Ishak Institute or ISEAS, it was perceived as the most generous provider of Covid-related assistance in the region during that year. 

By the end of 2022, Beijing had distributed 2.18 billion doses of the vaccine to 119 countries. 

President Xi Jinping and the “East is Rising.” Photo: Wikimedia

The resilience and strength demonstrated by China starkly contrasted with the United States, which faced a combination of political, economic, and diplomatic challenges when facing the pandemic. 

In light of both hard and soft power setbacks, US think tank leaders warned that the country might encounter its “Suez moment,” referencing the historical event in 1956 that marked the decline of Britain as a world power. 

While fighting the pandemic, Washington also had to address a faltering economy, which contracted by 3.5% in 2020. 

Under President Donald Trump, the battle against Covid-19 not only turned out to be a much more deadly and divisive process, but the US also retreated from global commitments, notably terminating its relationship with the World Health Organization.  

Within a span of no more than two years, however, the dynamics of power balance took an opposite twist. 

Economic boost

The American economy fully recovered all pre-pandemic GDP losses by 2021. A year later, it attracted nearly 50% more foreign investment than China. 

Economic growth remained strong through 2023.  

Indeed, the United States has undergone the most robust recovery among the G7 nations, as measured by GDP. As the economy roared back from the pandemic shock, China’s recovery faltered. In 2022, it could only muster an annual growth of 3%. 

After it reopened, the anticipated swift and sustained economic boost failed to materialize. A massive loss of confidence has ensued among consumers and investors. The Chinese government reported a 5.2% GDP growth rate for 2023.  

Yet when measured in US dollars, its GDP actually saw a decline of 0.5% from 2022. The GDP gap between the US and China widened significantly from US$5 trillion in 2021 to nearly $10 trillion by 2023.

Unfinished property projects have hit China’s economy. Image: YouTube

Alongside the economic downturn, many of China’s soft power gains during the pandemic evaporated following the abandonment of its zero-Covid policy. 

The once-lauded “China solution” to the pandemic ultimately backfired, leading to more fatalities in two months than the United States experienced over three years. 

In addition, the appeal of its vaccines diminished quickly with the rapid spread of highly transmissible Delta and Omicron variants. 

Consequently, there was a steep drop in the global delivery of Chinese vaccines in fall 2021. 

The waning of Beijing’s influence is apparent in Southeast Asia, where China continues to be seen as the most influential economic and political-strategic power.

Bleak picture

Survey data indicates a consistent decline since 2020 in the percentage of regional elites viewing China as the most influential, while the perception of the United States’ influence has been steadily on the rise. 

From 2020 to 2023, the proportion of people viewing the US as the most trusted power surged by more than 20 percentage points. 

The bleak picture on China’s economy has sparked a debate on whether it has peaked. Optimists caution against hastily concluding that its economic growth has plateaued. 

However, even in the best-case scenario, its ascent to surpass the United States as the world’s largest economy will take longer than previously anticipated. 

Assuming a 5% annual growth rate, China might not overtake the United States until 2035. Some analysts even argue that its economy may never surpass that of the US. 

China’s manufacturing sector is suffering. Photo: Flickr

This view is echoed by Yan Xuetong, a prominent Chinese international relations expert, who has stated that the gap in national strength between China and the United States will only widen in the coming decade. 

A development that calls for a reevaluation of the US strategy towards China. 

For over five years, American policy has presumed China as a relentless growth juggernaut. 

A closer look at the dynamics leading to the decline in China’s relative power, however, uncovers deep-rooted barriers – individual, structural, and institutional – that impede its international ascendance. 

Moreover, a strategy excessively focused on competition incurs high costs and forsakes the huge benefits of bilateral cooperation, which is crucial for tackling global challenges such as climate change or pandemic response.

Strategic window

In the evolving geoeconomic landscape, China’s internal and external behaviors may shift, driven by concerns that its strategic window of opportunity is closing.

This fear and anxiety are reflected in Beijing’s crackdown on negative commentary over China’s economy, as well as its leaders’ repeated warning against “decoupling” from the country.  

So, the notion of China being a “peaking power” – a nation whose economic expansion has slowed but not stopped, may merit more attention than simply viewing it as an unceasingly ascending power. 

Yanzhong Huang is a senior fellow for global health at the Council on Foreign Relations, where he directs the Global Health Governance roundtable series.

This article, originally a Blog Post, was published by the Council on Foreign Relations under a Creative Commons licenseRead the original here.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of China Factor.