The latest wave of 'China's economic collapse' narrative will collapse again

Editor's note: Wang Wen, a special commentator on current affairs for CGTN, is Executive Director of the Chongyang Institute for Financial Studies, Renmin University of China. The Chinese-language version of this article appears in Chinese Social Sciences on March 1, 2024. This article reflects the author's opinions and not necessarily the views of CGTN.

In the past few years, Western politicians, media outlets, and think tanks have orchestrated a chorus of "Peak China" narratives, asserting that China's rise has reached its zenith, aiming to downplay China's development prospects and suppress expectations of China's growth. In particular, since the second quarter of 2023, virtually all major Western media outlets and China-focused think tanks and scholars have joined the discourse surrounding China's economic slowdown, participating in various ways in the agenda-setting of the narrative.

In fact, the current wave of "Peak China" rhetoric is simply a repackaged version of the discredited "China's economic collapse" narrative, the only difference being that it is longer and louder. Just as its predecessors were shattered by the reality of China's sustained growth, this new iteration with a different label will end up with egg on its face.

The largest "China's Collapse" narrative in 35 years

Since the late 1980s, Western media, think tanks, and politicians have repeatedly peddled the narrative of China's impending collapse. In the fall of 2021, American scholars Hal Brands and Michael Beckley published articles in Foreign Affairs and other journals, arguing that "China's relative strength has peaked," "China's rise has ended," and "China's decline has begun." This marked the resurgence of a new wave of "China's economic collapse" narrative in the West, which gained further momentum in the first half of 2023.

The Wall Street Journal serves as a prime example. Its Chinese-language website launched a special column China's Economic Slowdown. From August 2023 to early 2024, it published over 160 articles, including "The End of China's 40-Year Economic Boom: What's Next?," "China's Youth Labor Market Nightmare: A Changing National Landscape," "Is China's Economic Plight Comparable to Japan's 30 Years Ago? Possibly Worse," "China's EconomyCaught in a Vicious Circle," and "The Root Cause of China's Economic Deterioration: Public Distrust in Government Policies." 

Many of such "blockbuster" articles garnered widespread attention overseas. Furthermore, this absurd narrative has spread to Europe, Japan, South Korea, India, and other countries and regions, with voices questioning the scale, efficiency, and influence of China's economic development far exceeding previous levels.

It is worth noting that this round of "China's economic collapse" narrative employs a more "ingenious" and sophisticated approach, making it easier to resonate with certain pessimistic sentiments within China. Compared with the so-called "Political Collapse" and "Social Disintegration" narratives, this round focuses on the specific data and manifestations of China's economic performance in 2023, which significantly fell below expectations. 

It therefore argues that China's economy has fundamental structural and essential deficiencies. Moreover, it points fingers at China's decision-making and top-level design, drawing absurd conclusions such as "backtracking" on economic policies and reform and opening-up, aiming to suppress China's economic development and harm its social stability.

Debunking the malicious narrative: A reality check

The current wave of malicious narrative hinges on assertions that China's economic recovery in recent years has been slow and that its total economic output has fallen behind that of the United States. They exaggerate economic data that suggests weak consumer spending, low investment appetite, sluggish stock market performance, and continuous foreign capital outflow. Such manipulation aims to dampen investor confidence and weaken consumer behavior, creating a self-reinforcing cycle of evidence for the "China's economic collapse" story.

However, their arguments are clearly short-sighted and fail to see the bigger picture. They not only obscure the overall direction of China's economic transition towards high-quality development but also overlook the fact that China leads the world with its massive and robust real economy.

For example, China's exports of "Three New Champions" have been outstanding against a backdrop of the sluggish global economy:

First is photovoltaics: China currently holds over 50 percent of the global market share for photovoltaic products, including more than 75 percent for photovoltaic modules, around 80 percent for solar cells, and over 9 5percent for silicon wafers.

Second is new energy vehicles: China, after being the world's largest automobile manufacturer for 15 consecutive years, became the world's largest automobile exporter in 2023, with new energy vehicle exports reaching 1.2 million units, a year-on-year increase of 77.6 percent.

Third is lithium batteries: China dominates the top ten global power battery companies, with six of the entries being Chinese enterprises that hold a market share of 62.6 percent.

The "Three New Champions" in foreign trade have made significant contributions to mitigating global climate change and highlighted the potential of China's high-quality economic development, yet are rarely analyzed objectively in the "China's economic collapse" narrative.

A comparison of key economic data between China and the U.S. reveals that China's real economy is far ahead. In 2023, China's total electricity consumption (9.2 trillion kilowatt-hours) was 2.3 times that of the U.S.; China's automobile sales (30.1million units) were nearly twice that of the U.S.; China's crude steel output (over 1.02 billion tons) was 12.6 times that of the U.S.; and China's shipbuilding completion volume (42.32 million deadweight tons) was more than 70 times that of the U.S.

The fact that China's economy has not hollowed out points to the strength and stability of its future development.

Moreover, unlike Western countries, China has been actively and prudently avoiding cyclical financial crises caused by insufficient supply in the real economy and excessive speculation in virtual capital. It has been steadily promoting the healthy growth of the service sector, actively preventing and defusing systemic financial risks, and fostering stable and sustainable economic growth.

What's more striking is the rapid recovery of China's service industry. From the popular "Village BA" basketball games at the beginning of 2023 to the booming economy in Harbin by the end of the year, from the record-high cultural tourism consumption during the golden week of the 2024 Spring Festival holiday to the highest box office revenue in Chinese film history during the same week, the Chinese economy is heralding its spring and effectively debunking the malicious narrative fabricated by the West.

More countermeasures

Apart from maintaining sustained economic recovery and growth, which is the best way to debunk the narrative, there are more countermeasures China can take. Winning the public opinion battle and attracting foreign investment are among the top priorities.

To win the public opinion battle, it is imperative to undermine the malicious narrative by launching a counteroffensive of well-researched, credible, and targeted communication. Specific actions include: Organizing dialogues between Chinese and Western economic and financial think tanks; Encouraging Chinese economists to engage internationally and highlight narratives of China's rapid and high-quality development; Collaborating with international think tanks to release research reports on key areas such as new energy, artificial intelligence, high-end manufacturing, and green and low-carbon development; Utilizing new and traditional media to comprehensively showcase the achievements of China's high-quality development.

The key to winning a public opinion battle lies in the quantity and quality of information. The more abundant the relevant information, publicity, and public opinion in support of China's economic development confidence there is, the greater its positive influence will be.

To attract foreign investment, it is crucial to vigorously release and report on a series of comprehensive opening-up policies and their positive effects and to recognize the important contribution made by foreign investment to China's economic development. 

Specific measures include: Treating foreign enterprises, domestic private enterprises, and state-owned enterprises equally; Inviting foreign enterprise representatives to convey their confidence in the positive development of China's economy by holding foreign enterprise forums and encouraging them to write articles or attend consultation meetings in CPC media and publications, as well as their social media outlets (WeChat and Weibo); Delineating the policy benefits, specific policy changes, and profit outcomes of China's high-level opening-up, e.g. providing information on preferential local policies for different types of foreign-invested enterprises, highlighting the convenience of investment liberalization and facilitation of investment brought about by the reduction of the negative list for foreign investment access, further enhancing China's attractiveness to international capital.

In conclusion, with the deepening of reform and opening-up, the "cake" of China's economy is getting bigger and bigger, and the sense of gain, happiness, and security of the Chinese people are continuously improving. More bright economic data and real-world performance will undoubtedly cause this wave of "China's economic collapse" narrative to collapse, just like its predecessors.

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