Fang Lian Says: In the Xi Jinping Era, What Are China's Future Upper and Lower Limits? Unemployment, Famine, Cultural Revolution, Isolation?
Toronto Fang Lian posted a video: Fang Lian says: What are the upper and lower limits of China’s future in the Xi Jinping era? Unemployment, famine, Cultural Revolution, isolation?
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On March 11, 2018, the first session of the 13th National People’s Congress passed a new resolution that the President may not serve more than two consecutive terms. This resolution removed the previous restriction on consecutive terms. Eight years have passed, and the deletion of that sentence does not mean Xi Jinping can serve one more term, but that he will serve until death.
Xi Jinping is 73 this year; his father Xi Zhongxun lived to 88, and his mother Qi Xin lived to 99 and is still alive. Based on that lifespan, plus China’s technological progress, Xi could govern for at least another twenty‑five years. If Xi governs for another thirty years, what will China look like? What will its economic level be?
There are many predictions about the next twenty‑three to thirty years. Some say China is heading toward a North‑Korean model, others say it is becoming a second Japan. My conclusion is that the best case for China’s future is “Northeasternization,” the worst case is “Russification,” even “Iranization.” Today we will assess China’s economic upper and lower limits.
When talking about China’s decline, people mention “Japanization.” The term Japanization does not fit China well. On the surface, China now resembles Japan after its bubble burst, with falling housing prices and deflation, entering a slow‑decline phase. After Japan’s 1990 bubble burst, per‑capita GDP stagnated, lagging behind global development. At its peak, Japan’s per‑capita GDP was ten times the world average; now it is only 2.5 times, a thirty‑year decline to one‑quarter of its former level.
A similar situation has unfolded in China. In 2021 China briefly surpassed the world average, but in the past two years growth slowed and fell below the average again. The biggest difference between China and Japan is that Japan’s decline began when its per‑capita GDP was already ten times the world average, whereas China’s decline starts at parity with the world average. Both experience slow decline, but Japanese people tighten their belts, while China, after lifting many out of poverty, begins to fall back into poverty.
If China is not like Japan, then who? A good analogy is China’s Northeast. In the early reform era of 1978, the Northeast was the “eldest son” of the Republic, a wealthy region, with per‑capita GDP 1.45 times the national average. Benefiting later from the policies of Jiang Zemin and Zhu Rongji, the Northeast entered a slow‑development, slow‑decline rhythm. Its per‑capita GDP fell from 1.45 times the national average to only 70%, a decline of half. A slowly declining, non‑growing wealthy Northeast fits China’s future trajectory better than Japan.
The only advantage of “Northeasternization” is cheap prices. Prices in the Northeast have consistently risen slower than the national average. Second‑hand housing prices in Shenyang, Harbin and Changchun are all below 7,000 CNY per square meter; a 90‑square‑meter apartment in a provincial capital costs only six‑to‑seven hundred thousand CNY. Hegang’s housing is even a few ten‑thousands per unit. In the future China may see prolonged price stagnation, deflation, and a real‑estate slump. This means China will not face widespread hunger, which is a positive sign.
But that is the only positive. While prices are crushed, problems multiply. The first problem is the collapse of the population structure. In 2022 China recorded its first natural population decline, and the Northeast leads the way. Liaoning experienced negative growth as early as 2011, with Heilongjiang and Jilin following in 2015. The Northeast entered a demographic crisis seven years before the rest of the country. By 2025 the three Northeastern provinces will have only 290,000 newborns, a birth rate 57% of Japan’s and 63% of South Korea’s. The Northeast also has the most severe aging in China, with people over 65 accounting for 20% of the population, an ultra‑aged society.
This demographic structure leads to the second problem: fiscal collapse. Taking Heilongjiang as an example, in 2025 its annual revenue will be 153.5 billion CNY while expenditures reach 656.5 billion CNY, a fiscal self‑sufficiency rate of only 23.4%. Heilongjiang’s public debt totals 1.0819 trillion CNY, or 36,000 CNY per capita. The government runs a deficit and debt piles up.
Heilongjiang reflects the whole Greater Northeast. The third problem is employment collapse. Enterprise activity in the Northeast is weak; listed companies represent only 3.1% of the national total while the population accounts for 6.7%. The region’s enterprises are dominated by state‑owned firms, far above the national average. Slow decline combined with expanding SOEs leaves employment largely limited to “inside the system” and other precarious jobs. In Heilongjiang, “inside the system” pension contributions account for 78.82% of total, meaning good jobs are essentially only within the system; other jobs lack contracts and benefits, constituting flexible, insecure employment.
Young people have virtually no job opportunities; all decent positions are inside the system. Failing to enter the system means taking flexible, insecure work – the norm in the Northeast. The fourth problem is social decay. The phrase “investment does not pass Shanhai Pass” is often cited, blaming a “relationship‑based society” for the Northeast’s decline. In reality, economic decline comes first, then a relationship‑based society emerges. Under recession, a relational society is inevitable. In Hegang, spending time improving professional skills or education yields little benefit; it is more useful to spend time building connections and securing a non‑regular post. The relational society is not a moral failing but a rational product of low‑growth, declining markets.
Having covered the internal ledger, let’s look at the external one. China may face a decline in global standing. In the 1970s the Northeast was the Republic’s “eldest son,” after 2000 it became the “abandoned child.” In 2010 Henan had the worst reputation; today the Northeast’s reputation is poised to surpass Henan’s. China could meet a similar fate. We now teach India, Vietnam, Japan; if China’s decline continues, it will be their turn to teach us.
Using Japan’s 30‑year per‑capita GDP shrinkage to one‑quarter as a benchmark, China’s per‑capita GDP in 30 years would be about $3,300, comparable to today’s India and Pakistan levels. Living standards may not change much, but we will watch India and Pakistan catch up or even surpass us. Currently we look down on India; in the future we may have to look eye‑to‑eye. Vietnam, with a per‑capita GDP of over $5,000 now, may become a country we look up to. Today Chinese men go to Vietnam to marry; in the future Vietnamese may come to China to marry.
The Northeast watches other provinces surpass it; China may watch neighboring countries surpass it. Coupled with other issues, the greatest disaster for the nation – a generation that loses hope – will arrive. In the next 30 years, if Xi continues to rule, China’s upper limit will be a stagnant, low‑price, low‑wage economy dominated by state‑owned enterprises, scarce good jobs, social rigidity, a return to a relational society, compounded by aging and the rise of Southeast Asia and India. Young Chinese dreaming of an empire’s rise will, in old age, only watch its decline.
That is only the upper limit, and it is hard to maintain. It also requires ensuring Xi does not become more hard‑line and that international relations are handled well. Otherwise China will hit the lower limit: Russification, even Iranization. Under Xi, China’s upper limit may fall short of expectations but will be slightly better than many imagine. China will not become a second North Korea; it is more likely to become a second Russia or Iran.
For China to maintain “Northeasternization,” export stability and a growing trade surplus are prerequisites. A high trade surplus underpins China’s GDP growth. While China’s auto sales decline, exports have surged 53%. Exports are the safety net of the Chinese economy.
Maintaining export volume is challenging; I doubt Xi’s diplomatic ability. China’s current export model relies on low‑price dumping, which displeases many countries. Europe and the U.S. are drawn in reluctantly, but China still relies on price wars. China’s trade surplus has hit a record high, but how far this model can go remains uncertain.
After Trump took office, the U.S. imposed high tariffs on China; imports from China fell, yet China circumvented tariffs through transshipment. Europe condemns China’s overcapacity but cannot coordinate a unified response.
But in the future, as Chinese production capacity shocks cause unemployment rates in Europe and the United States to rise, the West may shift from never imposing tariffs to a solid wall of protection, and China is highly likely to be excluded from European and American markets.
This is similar to Russia. After the 2014 Crimea incident, the West began decoupling from Russia, and a large number of ordinary Russian products were excluded from European markets. In 2013 Russia's per‑capita GDP was $16,000; by 2016 it had been halved to just over $8,600. The blockade drove Putin into a self‑destructive spiral, ultimately attacking Ukraine to boost his popularity, which made the economy even worse.
When Russia invaded Ukraine in 2022, it faced a total Western blockade. Today Russia suffers shortages of supplies, fuel, and other essentials. If China were to experience the same, we do not know when China’s “Crimea moment” will arrive—it may have already arrived. China is unaware that it is on a decoupling path.
In this situation, China will complete a trade‑technology decoupling from the West at the cost of extremely low economic growth, possibly even a halving of per‑capita GDP. After the economy becomes incurable, Xi Jinping may order an invasion of Taiwan as a final gamble, staking China’s destiny on that war, which would bring even harsher blockades and deeper economic recession. China could become a second Russia, or even worse.
Russia is a major energy and grain producer and can still rely on imports from China after sanctions. China, on the other hand, lacks almost everything besides its labor force. Energy, minerals, and grain are highly dependent on imports. Russia can still lean on China; a blocked China has no one to lean on. China is not the China of the 1950s, nor is it the current Russia.
Russia has energy and grain and can still import electronics, automobiles, and medicines from China. China lacks energy, minerals, and grain and is heavily import‑dependent. Even assistance from Russia or Iran cannot solve problems with soybeans, edible oil, or white‑feathered chicks. China cannot rely on the Soviet Union as the 1950s China did, nor on China as modern Russia does. Who will a blocked China turn to?
After the West retreats, moral constraints will disappear, and China may breed monsters even scarier than Russia’s Wagner Group or Iran’s Islamic Revolutionary Guard Corps. Huawei already shows the flavor of Wagner plus the Guard, exporting surveillance equipment to Africa and helping dictators suppress their people. Relying on U.S. restrictions, Huawei monopolizes state‑owned enterprise equipment. In the future, criticizing Huawei could bring even harsher consequences.
A blocked Chinese population will face not only material shortages but also a second wave of exploitation by corporate interest groups. The best case could be a rapid regression to the 1980s‑1990s, with chaotic prices and supply problems, similar to today’s Russia. The worst case resembles Iran, where smuggled goods drive prices to double or higher.
This outlines the upper and lower bounds of China’s next twenty‑three to thirty years under Xi Jinping: the upper bound is a full‑scale “Northeast‑ization” of the whole country, the lower bound is “Russia‑ization,” even “Iran‑ization.” No one wants to experience such a China. China’s future does not have to be this way. If democratic transformation is achieved, China can become a developed nation. The only way to avoid all this is one: Xi Jinping steps down, the Communist Party steps down.
Resisting Xi Jinping is not about whether he is strong, but whether we should. We do not want to live a life of “Northeast‑ization,” “Russia‑ization,” or “Iran‑ization,” nor do we want the Chinese nation to lose its voice in the 21st century. Therefore we must confront the CCP and Xi Jinping. There is no room for negotiation or compromise. Even if the road is arduous, we must march forward without hesitation.