1. Will china rule the world?
Dr. Alan Dupont

2. Return of the Dragon

3. China’s meteoric rise
China’s stellar growth and development has been the big global story of the past 40 years.
Since paramount leader Deng Xiaoping launched his 1979 modernisation drive China has transformed from a populous but poverty ridden backwater to the world’s second largest economy and a rising military and technological power.
Many think that this rise will continue inexorably until China dominates the world much as the US did after WW2.

4. When china rules the world

5. If Jacques is right is this the future?

6. A contrarian View
Of course nobody knows. Humankind has not been gifted the ability to predict the future.
And there are reasons to doubt that artificial intelligence will prove any better.
But we do have useful intellectual tools to help us consider alternative futures.
The alternative future for China that I want to explore is a contrarian view – that far from becoming the world’s richest and most powerful state China will stagnate and possibly decline rather than prosper.
If so this will require a substantial rethink of our assumptions about China and the future international order. The implications for policy and risk management are equally profound.

7. Why china will not rule the world

8. Stagnation thesis
The stagnation thesis rests on the increasingly plausible argument that China’s continued rise is threatened by the convergence of three unfavourable economic, demographic and geopolitical trends.

9. Economic challenges
Stanford’s Niall Ferguson argues that “winter is coming” for overleveraged economies like China.
Manuel Panagiotopoulos believes that the Chinese economy is “a house of cards growing on performance-enhancing drugs like unsustainable debt and fiscal expenditure.”
Not a slowing economy but zero or below zero growth.
Debt – is financial China a “Ponzi scheme?”

10. Demographic decline
Demography is destiny (French sociologist Auguste Comte)
China’s demographic decline has been greatly under-estimated.
Chinese fertility rates fell below replacement levels 20 years ago exacerbated by the one child policy (now reversed).
The demographic dividend has become an impost.
China is ageing and shrinking. By 2030 it will be the world’s most aged society.

11. implications
This will cause a precipitous drop in China’s economic growth.
China’s future will be more like Japan’s – slowing growth rates followed by stagnation and then deflation.
The key difference is that Japan became rich before it got old.
China is not as innovative as its patent boom suggests.
Xi Jinping also has to worry about trade and tech wars with the US.

12. Going global – the bri

13. Expanding its military reach

14. Australia’s balancing act

15. Pushing down under

16. Geopolitical push back
The international environment is turning against China.
Its “mercantilist” and “predatory” behaviour is generating a push back in the US and globally.
The trade war is evolving into a full spectrum contest with the US for global pre-eminence.
Huawei imbroglio is representative.
Xi chose the wrong moment in China’s economic and demographic cycle to engage in empire building.

17. Known unknowns (Grey rhinos)
Environmental pressures.
Trade and tech wars.
Inequality (second highest in the world).
Continued restiveness in Xinjiang, Tibet and Hong Kong.
Political fragility.

18. Unknown unknowns (black swans)
Unforeseen and unintended consequences of the shift from cooperation to strategic competition between an established super power and an aspiring one.

19. Key conclusions
What would it mean for the world should China stagnate and decline rather than becoming this century’s richest and most powerful country?
The world would be a significantly different place requiring major policy and commercial adjustments as consequential as any we have made to support and accommodate China’s rise.
Prudence dictates we should be open to alternative futures.
There are many reasons to doubt that Xi can recapture China’s former greatness before demographic decline sets in.

20. The end