The Chinese economy at the crossroads and the uncertain future of the “China Model”

Abstract

China’s impressive development and modernization have entered into a politically and economically sensitive phase with the mounting external containment to suppress theseemingly unstoppable momentum of its continuous rise and the internal demand for sustainable growth and qualitative upgrading of the Chinese economy. At the current moment, the US and China are tightly locked in a fierce interstate competition due to A)China’s unfulfilled aspiration to become a true global superpower with the ability to redefine and revise the existing rules of the game set by the US-led global West and B) the strategicdesperation on the part of the US to sustain and prolong the deteriorating unipolar world order and reverse its relative decline. In a general sense, I tend to believe the Chinese economy is at the crossroads of developmentand evolution at the current moment. China has been gradually losing its demographicadvantages over time to aging and lower birth rate. Increasing productivity, rising income per capita and reinforcing its competitive position in the global economic system through technological innovation and advancement seem to be a both inevitable and promising avenueto elevate the Chinese economy onto a higher level of sophistication with improvedsustainability in the long run. However, the US has resorted to the strictly enforced“technology embargo”, especially the recent “chip ban”, to decisively block, or at least, hold back China’s rapid advancement in a wide range of strategically critical industries, such as artificial intelligence (AI), hypersonic missile development, aerospace engineering, quantum computing, and smart or self-driving (electronic) car etc. Therefore, in this article, I intend tocritically discuss how and why the Chinese economy is, once again, in a major crisis since thehugely successful, comprehensive reform in the late 1970s and what could be possibly done to safeguard the Chinese economy during a highly unpredictable and remarkably turbulent time of steadily mounting internal and external challenges.Key words: the Chinese economy, technological development, Sino-US interstate competition and the “China Model”.