NEW YORK – To anyone over the age of 60 who follows world affairs, the term “two Chinas” recalls the post-1949 competition for diplomatic recognition waged by mainland (“Red”) China and Taiwan, or, more formally, the People’s Republic of China and the Republic of China. By the early 1970s, just about every country fell in line with the People’s Republic’s demand that it alone be recognized as the legitimate sovereign government of China. The mainland was simply too large and too important economically and strategically to alienate.
Today, a new, but very different, “two Chinas” question is emerging. It centers on whether China is best understood as a strong country, with a promising future despite some short-term difficulties, or as a country facing serious structural problems and uncertain long-term prospects. In short, two very different Chinas can now be glimpsed. But which one will prevail?
Until recently, there was little reason to ask such a question. China’s economy was growing at an astounding average annual rate of 10% or higher for more than three decades. China had overtaken Japan as the world’s second largest economy. Hundreds of millions of Chinese had entered the middle class. China’s model of authoritarian efficiency seemed attractive to many other developing countries, particularly in the wake of the 2008 global financial crisis, which began in the United States and thus seemed to discredit American-style liberal capitalism.
But the question of China’s future has become unavoidable. Officially, economic growth has slowed to near 7%; but many believe the real number is below 5%. The slowdown should come as no surprise; all developing economies experience something similar as they grow and mature. Nonetheless, the speed and degree of change have caught the authorities off guard, and have stoked official fears that growth will fall short of the rate needed for the country to modernize as planned.