A Self-Fulfilling Vicious Circle? China’s Economic Prospects and Aggressive Geopolitical Posture after the COVID-19 Pandemic

A Self-Fulfilling Vicious Circle? China’s Economic Prospects and Aggressive Geopolitical Posture after the COVID-19 Pandemic

This study examines a possible self-fulfilling vicious circle between China’s economic uncertainties and its geopolitical aggressiveness in the post-COVID-19 era. We argue that China’s zero-COVID policy during the pandemic exacerbated structural problems in its economy that had gradually surfaced amid the US–China trade war and has resulted in a postpandemic economic rebound that has been weaker than expected if not short-lived. The window of opportunity for realizing the Chinese Dream may therefore be closing for Xi Jinping and the Chinese Communist Party, while they may choose to rely even more on chauvinism to consolidate their legitimacy. This dilemma will push China to adopt a more aggressive posture toward geopolitical issues, raising the likelihood of armed conflict in the Indo-Pacific. Yet, such a posture will inhibit China’s domestic consumption and investment, diminish its external trade integration, and blunt its economic statecraft, all of which will combine to increase the downward economic pressure facing Beijing. After demonstrating this vicious circle with empirical data, we offer new insights into China’s economic prospects and Indo- Pacific geopolitical changes after the pandemic. We also provide a political economic approach to discussing the future course of US–China rivalry and questions such as whether the two powers will fall into a Thucydides Trap.