Danger Zone: The Coming Conflict with China

by Hal Brands

It is January 18, 2025, and a war is about to start.

Anyone who tries to slow China’s progress, he likes to say, will have their “heads bashed bloody against a Great Wall of steel.”1

Chinese commercial car ferries plying the strait suddenly disgorge small, amphibious landing craft.

America cannot abandon Taiwan without betraying 25 million democratic citizens and shredding the credibility of its alliances with the Philippines and Japan.

In the White House Situation Room, the secretary of defense tells Biden that the bloodied U.S. forces in the western Pacific are unable to repel the Chinese invasion. Additional U.S. aircraft, warships, and submarines scattered everywhere from Hawaii to the Persian Gulf can try to fight their way toward the Taiwan Strait through a gauntlet of Chinese missiles, mines, and air defenses. But this will take days if not weeks and result in heavy losses with no guarantee of success.

That leaves one sure way to stop the invasion: Strike Chinese forces with low-yield nuclear weapons as they load in mainland ports and airfields.

But such a conflict might end up destroying Taiwan in order to save it—and prove disastrous for America and China alike.

At the time, most analysts assumed that Xi’s decision to attack was the inevitable outcome of China’s growing strength and confidence.

It had put new warships to sea at a rate no country had managed since World War II; it had stunned the Pentagon by leaping forward in hypersonic weapons and other advanced capabilities.

By outward appearances, Xi’s “Chinese Dream”—his ambition to make China dominant in Asia and around the globe—was on the verge of becoming a reality.

On the eve of war, the world still saw China as a rising power. Yet Xi saw a future of stagnation, strategic encirclement, and decay. So he gambled, with catastrophic consequences for the region and the world, because he knew his moment of opportunity wouldn’t last long.

The prevailing consensus, in Washington and abroad, is that an ascendant Beijing is threatening to overtake a slumping America.6 “If

China is certainly acting like it wants to run the show. The CCP is laying plans to create a Sino-centric Asia and reclaim what it sees as China’s rightful place atop the global hierarchy.

Our core argument in this book is that the conventional wisdom is wrong on both points. Americans urgently need to start seeing the Sino-American rivalry less as a 100-year marathon and more as a blistering, decade-long sprint. That’s because China will be a falling power far sooner than most people think.

Both history and China’s current trajectory suggest that the Sino-American competition will hit its moment of maximum danger during this decade, the 2020s.

The reason for this is China has reached the most treacherous stage in the life cycle of a rising power—the point where it is strong enough to aggressively disrupt the existing order but is losing confidence that time is on its side.

In crucial areas, from the Taiwan Strait to the U.S.-China tech rivalry, tantalizing opportunities have opened up as the balance of power has shifted in Beijing’s favor.

For more than a decade, China has been concealing a serious economic slowdown that existentially threatens the ruling regime. Within a few years, a slow-motion demographic catastrophe will create severe economic and political strains.

Through its “wolf-warrior” diplomacy and its confrontational behavior in hot spots from the Himalayas to the South China Sea, China has sprung a strategic trap on itself, scaring—and beginning to unite—potential rivals throughout Eurasia.

Not least, the CCP has now violated the first rule of global politics for the past century: Don’t make ...

We live in an age of “peak China,” not a forever rising China. Beijing is a revisionist power that wants to reorder the world, but its...

Xi’s regime is tracing a fraught but familiar arc in international affairs—an exhilarating rise followed by the prospect of a hard fall.

Beijing will push hard to create an economic empire that will allow it to squeeze concessions from countries around the world. It will try to weaken the democratic community by strengthening techno-authoritarianism at home and abroad. Most alarming, China will have strong incentives to use force against its neighbors—perhaps to teach Japan, India, or the Philippines a lesson, perhaps to bring a democratic Taiwan to heel—even at risk of war with the United States.

Time is on America’s side in a long twilight struggle. But the defining challenge of this decade will be crossing the danger zone.

Whereas Russia is essentially a two-dimensional great power that draws influence from its military and energy resources, China possesses a wider spectrum of coercive tools and can challenge the United States and its allies in almost any domain of geopolitical competition.

This book offers a contrarian take on China by explaining why that country is in more trouble than most analysts think, why that trend makes the coming years so perilous, and how America can prepare for the storm that is about to strike.12

Academics have long studied these subjects, but their work commonly rests on faulty premises: Countries must either be rising or falling; those on the upswing advance while those on the downswing retreat. Massive, system-shaking wars are likeliest during a “power transition”—when a surging challenger overtakes an exhausted hegemon. These ideas date back to Thucydides,

States can rise and fall simultaneously: They may seize territory or arm themselves rapidly even as their economies wheeze and stumble. The anxiety caused by relative decline, not the confidence that comes from rising strength, can make ambitious powers erratic and violent.

The greatest geopolitical catastrophes occur at the intersection of ambition and desperation.

China doesn’t want to be a superpower—one pole of many in the international system. It wants to be the superpower—the geopolitical sun around which the system revolves. Xi announced as much in October 2017, albeit in the opaque language that revisionist powers often use to obscure their intentions.

Under CCP leadership, Xi declared, China “has stood up, grown rich, and is becoming strong.” A country that the West had once hoped would follow its democratic example was now “blazing a new trail for other developing countries” to follow.

China’s grand strategy involves pursuing objectives close to home, such as cementing the CCP’s hold on power and reclaiming bits of China that were ripped away when the country was weak. It also includes more expansive goals, such as carving out a regional sphere of influence and contesting American power on a global scale.

That the CCP is in position to seek any of these objectives is a tribute to the greatest change in global politics during the past half-century—China’s emergence as a major power.

homes stand vacant, and there are enough empty properties for some 90 million people—a number greater than the entire population of Germany.64 Excess capacity in major industries tops 30 percent, with factories sitting idle and goods rotting in warehouses.65 Nearly two-thirds of China’s infrastructure projects cost more to build than they will ever generate in economic returns. Total losses from all this waste are difficult to calculate, but China’s government estimates that it blew at least $6 trillion on “ineffective investment” between 2009 and 2014 alone.66

The world hasn’t seen such a plunge in productivity from a great power since the Soviet Union in the 1980s.67

But China’s productivity problem is strikingly similar to what afflicted the Soviet Union: state-directed investment piling up in stagnant parts of the economy. China’s private sector is dynamic, but it is shackled to a bloated state sector that destroys more value than it creates.68

The unsurprising result of this inefficient system is massive debt. China’s total debt jumped eightfold between 2008 and 2019 and exceeded 335 percent of GDP on the eve of the COVID-19 pandemic.69

The problem has become so bad that roughly a quarter of China’s thousand biggest firms owe more money in interest than they earn in gross profits. Half of all new loans in China are being used to pay interest on old loans, a phenomenon known as “Ponzi finance.”71

From 2010 to 2012, Chinese shadow lenders doubled their outstanding loans to $5.8 trillion—a sum equivalent to 69 percent of China’s GDP. From 2012 to 2016, Chinese shadow loans increased by an additional 30 percent each year. China may be sitting on an impressive $3 trillion in foreign exchange reserves, but this amounts to less than one-tenth of Beijing’s total debt.74

As every country that has followed a similar growth-over-productivity model has discovered, throwing more money into an inefficient system yields diminishing returns. In Japan, it resulted in three lost decades of deflation and near-zero growth.

Since the 1970s, the party’s primary source of legitimacy has been the delivery of rising wages and improving living standards. Stellar economic performance has allowed the CCP to present Chinese citizens with a simple and strict social contract: The party retains absolute power while the people receive more wealth—and that’s it.

Unfortunately for them, their options are limited. One route would be to fully liberalize the economy by establishing secure private property rights, allowing free flows of capital and labor, and encouraging greater competition. But history shows that authoritarian regimes are loath to implement liberal reforms.

Access to credit would have to be granted on economic merits rather than political connections.

Inefficient state-favored firms would have to be allowed to fail. Free exchanges of information would ...

China also has the world’s largest e-commerce market and mobile payments system; it has been developing and rolling out a digital currency. And it holds solid shares of global markets for Internet software and communications equipment—primarily because the Chinese government prevents foreign Internet and telecommunications firms from operating in China, giving Chinese firms, such as Alibaba, Baidu, and Tencent, a captive market of 1.4 billion people.

The main reason is that China’s top-down R&D system, though excellent at mobilizing resources, stifles the open flows of information and willingness to challenge conventional wisdom necessary for sustained cutting-edge innovation.

China’s leaders see the writing on the wall. They know their investment-driven growth model is running out of steam, their people are about to age and die off in huge numbers, their country is becoming a barren wasteland, and their efforts to engineer innovation from the top down may not pan out. They also recognize that a prolonged economic slump spells the end of their country’s rise and, perhaps, of the CCP.

Slowing growth also will force the CCP to make excruciating choices between buying guns for the military or social services for an aging population. If China’s leaders prioritize the military over the people, they risk revolt. But if they slash defense spending to make way for social security, they can kiss their dreams of reconquering lost territory goodbye.

As if these dilemmas weren’t vexing enough, China’s leaders also have to worry about their personal fortunes,

And Xi Jinping, the ultimate Chinese triumphalist, has given multiple internal speeches warning of the potential for a Soviet-style collapse triggered by “black swans” and “gray rhinos”—investor jargon for system-crippling economic crises.84