China's economic hurdles will likely increase as Xi Jinping doubles down on his state-directed approach to development, according to an assessment by the U.S. intelligence community.
"During the next few years, China's economy will slow because of structural barriers and Beijing's unwillingness to take aggressive stimulus measures to boost economic growth," read the Office of the Director of National Intelligence's (ODNI) annual worldwide threat report released Monday.
Instead of roaring back after the end of its lengthy "zero-Covid" lockdowns, China continues to suffer from what The Economist dubbed "economic long Covid." The symptoms include slowing growth, low consumer confidence, high youth unemployment, falling foreign investment, and the aftermath of its collapsed property market bubble.
"Beijing understands its problem but is avoiding reforms at odds with Xi's prioritization of state-directed investment in manufacturing and industry," the report says.
The report pointed to a longstanding belief in Beijing that the tech-savvy second-largest economy would leave the West behind, malaise has set in and is set to deepen, the report said, citing China's aging workforce and cratered investor and consumer confidence on the back of Xi's top-down policies.
Haunted by the unchecked expansion that led to the country's real estate crisis, Xi is prioritizing a "high-quality growth" model of state-directed development of strategic industries instead of maximizing overall growth.
This chart, provided by Statista, shows China's real GDP growth since 1980.
China's continued slowdown would reduce its demand for global commodities, leading to a glut that will drive down prices worldwide, and slow global growth.
Long-term constraints would force the country's economic stewards to make difficult choices when prioritizing the industrial, military, and social policies, as well its capacity for overseas lending—a key driver of Beijing's international influence, the report forecast.
However, this belt-tightening is unlikely to affect the one-party state's core priorities, the authors said.
Newsweek reached out to the Chinese embassy in Washington with a written request for comment.
Elsewhere, the authors of the threat report stated that China and Russia are intensifying their military efforts to challenge U.S. influence across the globe. These efforts include modernizing and expanding their nuclear arsenals, enhancing cyber and anti-satellite capabilities, and increasing their global military footprint.
Also highlighted was North Korea's efforts to solidify partnerships with China and Russia, as well as the hermit kingdom's use of chemical weapons.
The ODNI oversees U.S. intelligence, coordinating its efforts, and provides national security guidance. It serves as the principal intelligence advisor to the president, National Security Council, and Homeland Security Council.
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Micah McCartney is a reporter for Newsweek based in Taipei, Taiwan. He covers U.S.-China relations, East Asian and Southeast Asian ... Read more
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