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One familiar narrative about China in the United States centers on its growing power and influence, and warns that America remains ill-prepared for the long-term competition it poses. This story is true but incomplete. China is indeed a formidable rival, but its Communist Party faces deep problems and possibly even decay. And it is precisely because of its weakness that China presents so complex a challenge. Even as it has become more influential on the international stage, political and economic problems have festered at home.

Xi Jinping’s China is an infirm colossus that will be frustrated by unmet ambitions. A strong but frustrated country poses a special kind of danger. This is the China Nightmare.

Xi maintained a low-key persona as he rose to power. Few knew what type of leader he would prove to be when he took over in 2012 from his predecessor Hu Jintao. Unlike Hu, Xi exudes confidence and charisma. And, unlike Hu, Xi has been unabashed in giving voice to his grand ambitions. Xi, it turns out, is a radically different breed of Chinese Communist Party leader, a ruthless strongman.

Although China was ruled by a dictatorship before Xi’s ascent, he has made a radical bid to obtain almost total authority over his country’s affairs. In doing so, he has paralyzed the normal functioning of the state’s bureaucracy. In the case of COVID-19, for example, his centralization of control hobbled the activities of officials closest to the epicenter of the pandemic in Wuhan. The “Beijing model” was supposed to be an efficient alternative to democracy, which was supposedly more sclerotic and incompetent. Instead, the Beijing model has now inflicted untold misery on its own people and the rest of the world.

Under Xi, the Chinese government’s goal is to replace the U.S. alliance system with a new network of strategic partnerships with China at the center, and to propagate a “China model” of economic and political governance. It wants to create a new world order based on what it calls a “community of common destiny” that reshapes global institutions to be more compatible with the CCP’s own authoritarian governance, diminishing the influence of Western-style democracy as championed by the U.S. and its allies.

China Nightmare book cover
This post is excerpted from Blumenthal’s recent book.

World opinion leaders have been astonished by the scope of China’s plans under Xi, and they tend to assume that the nation will make those plans reality. There is a sound basis for this thinking. The CCP has been very successful over the past half century. But the truth is that Xi and his nation will face major obstacles going forward.

China’s impressive gains in power and influence over the past 40 years obscure that its era of what the former Chinese leader Deng Xiaoping called “reform and opening” has ended. The economic market reforms that rocketed China to the top of global power indexes were halted more than a decade ago. And all its seeming political improvements—the incremental liberal reforms in law and governance—have been reversed. Xi has undermined the very system that allowed Chinese power to flourish.

As a result, today China faces considerable challenges in the main spheres of economic growth: land, labor, and capital. China has no real property rights, which, combined with severe environmental degradation, means that land is badly misused and does not generate significant economic growth. Even before the pandemic, China’s GDP growth in 2019 had tumbled backwards to its lowest levels since the early 1990s.

Moreover, because of the one-child policy, China will soon face a labor shortage that will only worsen over time. The CCP also confronts enormous social costs related to its massive aging population and its need to provide a social safety net. Inefficient state-owned enterprises and politically motivated state banks dominate the economy. Thus, unsurprisingly, capital is badly misallocated.

China is unlikely to overcome what is known as the “middle-income trap” by restructuring its economy and becoming more innovative. It has neither the legal infrastructure nor the intellectual-property regime necessary to accomplish that goal. Some elites are trying to leave China. Others, who cannot leave, are attempting to at least get their money and families out. In addition to brain drain and capital outflows, China faces unprecedented social challenges as a consequence of its severe gender imbalance, as there are tens of millions more young men in the People’s Republic of China than women.

The CCP is still tormented by the events that almost led to its collapse three decades ago. There is a direct line from the Tiananmen Square massacre to the ideological crackdown and building of a national-security state that Xi is pursuing. As the political scientist Andrew Nathan has concluded, the CCP still believes that it is under “siege from enemies at home colluding with enemies from abroad; … that economic reform must take a back seat to ideological discipline and social control; and … that the party will fall to its enemies if it allows itself to be internally divided.” Given its new prominence in world affairs, observers have difficulty grasping the extent of the siege mentality in Beijing.

Ironically, Xi’s strategy might just lead to even greater problems for the CCP. He has centralized power and removed vital social and political pressure release valves. Xi has no appointed successor. No one knows who will take over when he dies or how a potential successor would be vetted and chosen. At the same time, Xi has waged a ferocious anti-corruption campaign, creating redoubtable enemies. Elites in Beijing perceive Xi as arrogant and prone to mistakes, as Freedom House’s Sarah Cook recently argued.

Xi’s emphasis on ideological commitment and discipline created a highly personalized and centralized leadership structure, but backlash against Xi risks bringing about the very splits and factionalism the CCP fears. His political strategy, which has included strong-arming and imprisoning large numbers of political opponents, is causing more fissures in the system. Resistance to Xi has expanded over his mishandling of COVID-19. The Chinese billionaire Ren Zhiqiang’s criticism of Xi’s management of the COVID-19 pandemic is just one example of growing high-profile dissent.

Besides internal dissension, Xi faces the frightening prospect of a foreign-policy defeat. For example, if Xi fails in his current attempts to reunify, the internal backlash against him will be fierce. In addition, if the U.S. successfully undermines China’s advances in the South China Sea, the result may also be humiliation for Xi, who would get blamed inside China for imperial overreach.

We also know from history that declining powers are no less dangerous than rising ones. In the run-up to World War II, Western pressure elevated Japan’s fear of decline. Russia is not exactly ascending, yet it is still quite capable of posing a major threat to the world order, as illustrated by Vladimir Putin’s invasion of Ukraine.

There is a paradox at the heart of the U.S.-China relationship and, indeed, the future of great power relations. It is not only China’s strengths that make it so dangerous, but also its weaknesses, a fact that tempts the CCP to escalate tensions and increases the possibility of conflict. For a great authoritarian nation like China, dissatisfaction leads to lashing out. China is powerful enough to pose security threats, yet also weak, paranoid, and incompetent enough to turn a local epidemic into a global plague.

The frustration of the CCP’s grand plans by internal weakness and decay will still be a nightmare for the U.S. and its allies. China is so enmeshed in the international system that its internal problems will have an impact well beyond its borders. As COVID-19 has made clear, the continued existence of the CCP depends on censoring the truth and punishing those who attempt to tell it. Xi is pushing the CCP—and China—to the brink. The question is whether he will stop before he pushes it over the edge.


This article is excerpted from Blumenthal’s book, The China Nightmare: The Grand Ambitions of a Decaying State.

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