Why I’m becoming a China bear

When I tell people I’m becoming a China bear, they’re often surprised. “Weren’t you already a China bear?” they ask me. Well, no. I’ve always been a China bull, believing that China’s economic growth would be robust, their technological mastery would be assured, and their geopolitical influence would expand. This is why I also advocated for friend-shoring, export controls, and military alliances to balance China's power.

Even as signs of weakness emerged in the late 2010s and early 2020s, I still believed this would be the Chinese Century due to their advantages in human capital, market size, and state capacity.

Now, for the first time, I’m becoming bearish on China. I still envision the country as immensely powerful, at the forefront of technology, and maintaining a safe, moderately prosperous life for its people. However, I’m increasingly questioning the feasibility of China attaining global hegemony, like the U.S. during the 20th century, and I now consider the bid for technological dominance weaker than previously thought.

Three factors contribute to my shifting expectations. First, China's system is heavily optimized for a rapidly changing technological and economic era, which it may struggle to adapt to. Secondly, their new economic model aimed at capturing global high-tech manufacturing is unlikely to succeed. Lastly, Xi Jinping's political situation is deteriorating, with his increasing paranoia leading to an inward shift in governance and economic policies running out of steam.