TAIPEI (Taiwan News) – Michael Pettis, professor at Peking University (北京大學) in Beijing says China will not "become the dominant superpower of the 21st century" due to its high debt, structural problems and inability to innovate.
Professor Pettis believes that China's huge debt is going to drag down growth and that its structural problems like an aging population and inequality, in conjunction with an inability to innovate due to authoritarian controls on society will make matters worse.
The World Bank estimates that China accounted for around 14.5 percent of global output in 2016, but Pettis calculates that in the next 20 year's China's share of global output will shrink to around 10 percent.
In this regard, the professor does not believe China represents an existential threat to the U.S.-led global order.
"China is not the great existential threat that you think it is. China's not going to become the dominant superpower of the 21st century" Pettis said in an interview with Bloomberg News.
China's high level of debt, which is growing faster than any country in human history, may not bode well for its economic longevity.
Pettis points to Japan to make the assertion that every country that had a significant investment boom, thereafter had a period of reduced share of global output during a period of adjustment.
Pettis also believes that China will not become the global centre of high technology industries due to its authoritarian government.
He says that strict controls on the people are not conducive to an innovative society, and that no government has ever been able to be at the centre of a thriving culture of innovation.
In light of these problems, Pettis says that China's biggest problem in the coming years is how it will hold itself together.
Michael Pettis is professor of finance at the Guanghua School of Management.