Don’t Root for China’s Continued Malaise

China has a dilemma.

Its once brilliant economy is losing its sparkle. Its real estate industry is drowning in debt and failing to honor commitments. Exports are slumping. One in five college graduates is unemployed. Deflation appears to be taking hold. It’s getting so bad that even the usually deceptive Communist Party leadership is having a tough time finding a positive spin.

Why should we in the United States even care? China is our biggest economic rival after all. But we should care—a lot.

China is a major player on the international geopolitical stage and a massive economic force that America helped create over the past 50 years. Since 1973, China’s economy has grown from $138.5 billion to nearly $18 trillion today while U.S. GDP has jumped from $1.4 trillion to $20.4 trillion. During its climb, China has raised 800 million citizens out of poverty while becoming the world’s manufacturing and export capital. Globally, developing countries profited by providing the minerals and raw materials that China turned into finished goods and consumer products ranging from furniture to pharmaceuticals and clothing to cell phones.

We in America have also benefited from China’s rise. For instance, the cost advantage of well-made Chinese imports helped keep pre-pandemic inflation low. China’s advance also pushed the United States to transform itself from a manufacturing-heavy economy into one based on service industries, which now employ nearly eight out of 10 workers. While this change hurt many blue-collar families, the tradeoff helped the U.S. economy to grow 3.5-fold (inflation adjusted) since 1973. Today, nearly 38% of Americans are college graduates, up from 11% 50 years ago. U.S. universities are the envy of the world.

Obviously, the United States thrived economically at the same time as China did. It has been a win-win for both countries. So, it’s doubtful that we would be better off with China in a malaise, which could have a ripple effect around the globe.

Hopefully, it can manage through its current issues and maybe become a better international citizen using its newfound economic muscle to continue bolstering its burgeoning middle class while developing fair and equitable trade deals with all countries.

Ingenuity, innovation and good old economic competition are the best ways to foster a growth climate that benefits everyone in the world.