Not long ago, pundits were debating the consequences of China’s inevitable rise. Today, however, the Chinese economy has slowed growth to the point that some are beginning to doubt whether it will ever eclipse the United States’ as the world’s largest, something that had previously seemed a foregone conclusion. The discourse has suddenly shifted to “peak China” and how Washington, and the world, should manage Chinese decline.
Many have sought to explain what went wrong for China—from the shock of its zero-COVID policies to the gut punch of de-globalization and a trade war with the United States. Some have simply argued that China fell victim to the “general logic of authoritarian regimes.”
One of the most venerable and compelling explanations is that China is simply reaching the limits of its investment-heavy, export-driven growth model—an explanation adopted by the leadership of the Chinese Communist Party (CCP) itself in the wake of the 2008 financial crisis. Chinese leaders believed then that if they could increase consumption at home, China would not be as dependent on foreign consumers racking up debts to buy Chinese goods.
