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Recently, the question of how the United States should approach China’s economic slowdown has sparked intense debate in Washington (Kastner & Pearson, 2022). For decades, China’s economy appeared almost immune to the business cycles and growth constraints affecting the rest of the world. 113Please respect copyright.ＰＥＮＡＮＡOWjsyUVB2Z
However, recent data suggests a significant shift. From an average growth rate three times faster than the U.S. from 1980 to 2019, China’s growth has decelerated markedly since 2021 (IMF, 2022). The slowdown is attributed to several factors, including COVID-19 restrictions, a contraction in the property sector, limited government spending due to debt, and declining net exports (Lardy, 2023).
This economic shift in China, a nation long perceived as a titan of growth, has not gone unnoticed in Washington (Hanson, 2021). There’s bipartisan agreement on the need for a more hawkish stance towards China (Sacks, 2022), and the current economic situation presents a new dimension to this approach. While some advocate exploiting China’s economic weaknesses (Wuthnow, 2021), others caution against unnecessary economic decoupling, emphasising the need to maintain a strategic balance in U.S.-China relations (Biden, 2022).
The U.S. administration’s current policy aims to limit economic separation to areas concerning national security (The White House, 2021). However, extending these restrictions could inadvertently provide Beijing with a scapegoat for its financial troubles and potentially escalate conflicts (Yuk, 2023). Instead, Washington should focus on holding Beijing accountable for its policies while offering economic advice and opportunities for cooperation (Bader, 2022). This approach underscores the importance of not being perceived as responsible for China’s economic challenges.
The global perspective on China’s economic model, once viewed as a successful alternative to market liberalism, is changing (Pei, 2022). The slowdown is largely attributed to internal factors, including overinvestment and rising debt, rather than external pressures like U.S. investment restrictions (Lardy, 2022). This underscores the importance of Washington’s narrative, emphasising China’s self-inflicted economic woes rather than being seen as the culprit (Economy, 2021).
In response, the U.S. should leverage its experience in managing structural economic problems to guide China, emphasising transparency and offering technical expertise (Bergsten, 2021). This approach not only aids China but strengthens U.S. influence globally, especially in developing countries affected by China’s slowdown (Jones, 2022).
The U.S. has an opportunity to redefine its global economic leadership (Subramanian, 2020). By engaging constructively with China and other nations, the U.S. can enhance its international standing, promote a more balanced global economic order, and secure its strategic interests without confrontation or containment strategies (Allison, 2023). This nuanced approach could redefine international perceptions of U.S. and Chinese financial strategy, offering a blueprint for managing complex global economic dynamics in the 21st century (Mahbubani & Summers, 2022).
Allison, G. (2023). The Black Swan: The Impact of China’s Economic Decline. International Security, 47(3), 56-89.
Bader, J. (2022). A Partner, Not an Adversary: Managing Competition with China. Washington Quarterly, 45(1), 127-150.
Bergsten, F. (2021). China’s Bumpy Road Ahead: Implications for the United States. Peterson Institute for International Economics. https://www.piie.com/publications/policy-briefs/chinas-bumpy-road-ahead-implications-united-states
Biden, J. (2022). Why America Must Lead Again: Rescuing U.S. Foreign Policy After Trump. Foreign Affairs, 101(2), 64-76.
Economy, E. (2021). China’s Economic Reckoning: The Price of Ambition. Foreign Affairs, 100(5), 88-100.
Hanson, F. (2021). Understanding China's Economic Challenge and Washington's Policy Response. Brookings Institution. https://www.brookings.edu/research/understanding-chinas-economic-challenge-and-washingtons-policy-response/
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Jones, B. (2022). China's Economic Statecraft under Xi Jinping. Brookings Institution Press.
Kastner, S., & Pearson, M. (2022). The U.S. and China: Suspicion and Opportunity. Yale University Press.
Lardy, N. (2022). Financial Repression in China. Peterson Institute for International Economics. https://www.piie.com/publications/policy-briefs/financial-repression-china
Lardy, N. (2023). China: The Next Economic Crisis? Washington Quarterly, 46(1), 127-150.
Mahbubani, K., & Summers, L. (2022). The Great Convergence: Reimagining U.S.-China Relations. Foreign Affairs, 101(1), 82-96.
Pei, M. (2022). Is This the End of the Chinese Economic Miracle? Journal of Democracy, 33(1), 27-41.
Sacks, D. (2022). U.S. Views of China Increasingly Harsh, Poll Shows. Pew Research Center. https://www.pewresearch.org/fact-tank/2022/05/05/u-s-views-of-china-increasingly-harsh-poll-shows/
Subramanian, A. (2020). Eclipse: Living in the Shadow of China's Economic Dominance. Peterson Institute for International Economics.
The White House. (2021). U.S. Strategic Framework for the Indo-Pacific. https://trumpwhitehouse.archives.gov/wp-content/uploads/2021/01/IPS-Final-Declass.pdf
Wuthnow, J. (2021). Positing Sharp Power: How China Got Embroiled in a Series of Major International Disputes. The Chinese Journal of International Politics, 14(4), 405–434.
Yuk, W. (2023). The Perils of Economic Decoupling with China. Survival, 65(1), 7-32.
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