Securing the Future: Understanding China’s Internal and External Fears

The chapter unpacks the dual centrality of insecurity in China. On the one hand, China perceives and depicts its environment as increasingly insecure. Externally, this is attributable to the growing political, military and economic pressure exerted by foreign powers, at a time when the United States is increasingly restricting trade in semiconductors, which top the list of China’s imports and represent the main vulnerability of Beijing’s economy. Domestically, by contrast, the main challenge is the imbalance in the growth model, which is no longer seen as capable of delivering the necessary growth rate without generating further risks. The biggest of these is the financial risk posed by escalating debt at both central and provincial levels, caused by subsidy policies involving public investment to achieve the Party-set growth targets. The other key route to safeguarding China’s economy lies in innovation, which has been made potentially problematic by the major restrictions to be imposed on technology transfer.