Biden, China, and cheerfulness

Dwight Eisenhower’s cultured despisers, whose number was less impressive than the number of electoral votes Eisenhower reaped (899 of a possible 1,062), complained that his grin was his political philosophy. Ronald Reagan, who remained a Democrat for 10 years after he cast his first Republican presidential vote, for Eisenhower in 1952 (Reagan later won 1,014 of a possible 1,076 electoral votes), was disparaged for being a human sunrise, unreasonably cheerful about this fallen world.

Eisenhower and Reagan, however, like Franklin Roosevelt, knew something that, now more than ever, is germane to governing Americans: A sunny presidential disposition can be consequential. Optimism can be infectious; optimistic people stay in school, get married, have children, make investments and generally embrace the future. Joe Biden thus needs a narrative that refutes today’s political angst, which includes unreasonable forebodings about China’s supposedly ineluctable rise.

Decades of growth have propelled China’s rise from an almost entirely peasant society, to one that still has an enormous peasantry. This growth, which was more rapid than can be continued, pulled China’s per capita GDP to $9,770, 72nd in the world, slightly better than Mexico’s, still behind Russia’s, one-fourth that of neighboring Japan and one-third that of South Korea, and 15% of the United States’ $62,887. The bitter fruit of China’s “one-child policy,” from 1980 until 2016, is an aging population that will become gray before it becomes rich. Last year China’s birthrate fell to 1.05%, a record low (the U.S. rate is 1.73%) and China is projected to be among 55 nations with fewer people in 2050 than today. By 2030 Chinese deaths might exceed births. Today, China’s working-age population is 70% of the total population; it is projected to plunge to 57% by 2040, when there will be barely two workers to support every retiree.

In a March review for the Financial Times of two books on China’s economy, Geoff Dyer, the paper’s former Beijing bureau chief, noted that China cannot become “the first authoritarian regime to enter the exclusive club of high-income countries” unless it avoids “the ‘middle-income trap,’ where it can no longer compete on cheap manufacturing but does not yet have the skills or technology to sustain more advanced industries.”

Then there are socialism’s inevitable irrationalities: Stateowned banks favoring stateowned industries is one reason China’s debt burden is more than triple the size of China’s GDP. Writing in Foreign Affairs (“China’s Coming Upheaval”), Minxin Pei of Claremont McKenna College says inefficient state-owned enterprises “control nearly $30 trillion in assets and consume roughly 80% of the country’s available bank credit, but they contribute only between 23% and 28% of GDP.” Posters in glistening, modern Shanghai depict rays of light flowing from Xi’s head, but he urges followers to fill their heads with the pre-modern musings of Stalin, Lenin and Mao, a recipe for economic sclerosis.

The U.S. trajectory is different. Also writing in Foreign Affairs (“The Comeback Nation:

U.S. Economic Supremacy Has Repeatedly Proved Declinists Wrong”), Morgan Stanley’s Ruchir Sharma notes that beginning in 2010, after the weakest decade of U.S. growth since World War II, the nation had a full decade without a recession for the first time since at least 1850, when record-keeping began, and the U.S. share of global GDP expanded from 23% to 25%, back to where it was in 1980, before China’s ascent began.

In the 2010s, the U.S. stock market rose 250%, almost quadruple the average gains of other national stock markets. (China’s rose 70%.) “By 2019,” Sharma writes, “the United States accounted for 56% of global stock market capitalization, up from 42% in 2010. The value of the U.S. stock market, relative to all others, was at a 100-year high.” Today, “seven of the world’s 10 largest companies by total stock market value are American, up from three in 2010.” Globally, 75% of loans to individuals and companies are denominated in dollars, up from 60% before the 2008 crisis.

Although technology investments, partly the result of a culture of innovation fueled by great research universities, have been crucial, Sharma says, “the more important U.S. advantage has been a relatively high population growth rate: babies and immigrants, not Stanford and Google.” Sharma adds: “The most important driver of any economy is the working-age population, which is still growing in the United States but started shrinking in China five years ago.”

Donald Trump says a Biden presidency would mean “China will own the United States.” Trump’s reelection would entrench his misunderstanding of both nations.