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China’s economy: Policy failure or paradigm shift?

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The meetings of the 14th Chinese People’s Political Consultative Conference and the 14th National People’s Congress, known as China’s most important annual political event, have begun. They are known in the West as the ‘Two Meetings’ and in China as the ‘liang hui’ because they begin one day apart. The Chinese People’s Political Consultative Conference, attended by more than 2,000 delegates from eight parties other than the Communist Party of China and various sectors of society, is, as its name suggests, a consultative body. The National People’s Assembly is the highest legislative body, with around 3,000 delegates from the CCP and other parties.

Delegates elected by the People’s Assemblies from the remotest corners of the country, from provinces and cities to counties and townships, are also important for understanding political participation in China. In his article for The Diplomat, Patrick Meyer of Peking University preferred the term ‘capillary democracy’, while the Chinese media’s coverage of the two sessions in 2023 emphasised that the process was a living example of ‘full-scale democracy’. These concepts, highlighted at a time when US President Joe Biden claimed that autocracy and democracy fronts were at the heart of international alignment, were later followed by the Chinese Foreign Ministry’s report entitled ‘The State of Democracy in America’.

What does the data say about China’s economy?

Coinciding with the 75th anniversary of the founding of the People’s Republic of China, the narrative of this year’s meeting of the two leaders is dominated by the economy. While the Western press declared that the ‘Chinese miracle’ was over, US President Joe Biden likened the Chinese economy to a ‘ticking time bomb’.

There are three interrelated reasons for these assessments in Western capitals. The first and most important is the 5.2 per cent growth rate that the Chinese economy is expected to achieve in 2023. Although this rate is above the global average of 3 per cent and satisfactory for many countries, it is the lowest level for China since the 1990s (excluding the pandemic period).

The performance of China, which has become the world’s second-largest economy and the engine of global growth with an average growth rate of 9% for many years, is thought to have been affected by policies geared towards the property market. It should not be forgotten that stagnation in the property sector, which accounts for a quarter of China’s gross domestic product, is a source of employment for millions of people and increases unemployment rates.

The second reason for the pessimistic picture of the Chinese economy is the declining share of exports in economic growth. According to the 2023 data, China’s exports fell by 4.6 per cent to $3.38 trillion. It is clear that geopolitical tensions are behind this contraction rather than the ‘invisible hand’ that regulates markets.

In order to prevent the rise of China and maintain its hegemonic position in the global system, the United States and its allies have for some time been trying to diversify their supply chains in the name of ‘de-risking’. It is not surprising that by 2023 Mexico will overtake China as the largest exporter to the US for the first time in 20 years.

The third reason for believing that China’s growth will eventually cease to be a ‘model’ is the country’s changing demographics. While this change may not set off alarm bells in the short term, Chinese experts recognise that it is a serious challenge.

While China’s National Bureau of Statistics reports a population decline of 850,000 by 2022, models by the United Nations Population Division suggest that China’s population could fall below 800 million by 2100. Beijing is also concerned about its growing elderly population, with the National Health Commission predicting that the number of people over 60 will rise from 280 million in 2022 to 400 million in 2035.

Geopolitical pressures and new productive forces

Western pundits are analysing policy failure, arguing that China’s high growth rates have come to an end and that the success story based on external demand is eroding. Such a judgement (if not wishful thinking) may be premature. Indeed, the economic policies that China has been pursuing for some time point to a paradigm shift rather than failure.

According to the Chinese leadership, which believes that analysing the economy in terms of short-term growth rates is short-sighted, what is needed is to succeed in changing the means of production and the relations of production in a way that captures the spirit of the times, however painfully. This technology-centred concept, known as the High-Quality Development Plan, was introduced by Chinese leader Xi Jinping in 2017, then included in the 14th Development Plan in 2021, and finally elaborated at the 20th Party Congress.

As a result of the two current sessions, the concept of ‘new productive forces’ is expected to serve as a guide for China’s journey towards ‘high-quality development’. Based on the fact that traditional intensive labour has been replaced by data and artificial intelligence has transformed production relations, the Beijing administration laid out nine basic tasks at the Central Economic Work Conference in December, with the statement ‘scientific and technological innovation should lead the development of the modern industrial system’ at the top of the list. In short, China will stop devoting most of its resources to the traditional labour-intensive model and talk more about ‘chips’, more ‘bio-manufacturing’, more ‘artificial intelligence’ or ‘humanoid robots’, as we have seen in recent years. In this context, it is worth remembering China’s efforts to close the gap with the US, the leader in this field, by investing $456 billion in R&D by 2023.

It is clear that the changing geopolitical landscape is also affecting China’s focus on the New Development Plan. The trade wars that began under former US President Donald Trump and continued under current President Joe Biden, as well as the rise of global protectionism, have increased the importance of domestic demand for the Beijing government.

By increasing the share of domestic consumption in GDP growth by 43.1% to 82%, China is taking a serious step towards weaning itself off its dependence on external demand, and this share is set to increase as the consumer confidence index rises. It should be added, however, that China has not given up the expectation of exports or foreign investment. In line with the high-quality development model, sales of electric vehicles and solar panels are expected to increase by 30% and 54% respectively by 2022. This model, which relies on the domestic market but does not postpone exports, was announced by the Chinese at the end of 2020 under the name of ‘double circulation’.

In terms of demographic change, which could be a long-term concern for China’s economy, the country aims to increase the number of newborns in the long term while investing in systems such as artificial intelligence, robotics and automation that will help close the employment gap. In China, once known for its one-child policy, the new family planning law makes it easier for a third child to receive state support.

Potential challenges for China

It would be overly optimistic to expect China’s high-level development framework and the notion of new productive forces, which we will discuss more in the future, to be implemented without challenges. For example, China needs to increase the purchasing power of consumers as a prerequisite for its reliance on the domestic market. This requires the expansion of the middle class, currently estimated at 400 million out of a population of 1 billion 400 million.

Aware that China is going through a ‘special period’, Sheng Laiyun, deputy director of the National Bureau of Statistics, said at the announcement of the 2023 data: “The Chinese economy is currently at a critical stage of transforming its development model and optimising its economic structure.”

The extent to which a country as large as China will successfully complete this paradigm shift is one of the most important issues to watch. The success of the process, the speed and the sustainability of the transformation may bring a new version of the debates on the Chinese model, once famous in Turkey, to our agenda.

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Istanbul’s East-West Forum: A conversation the world can no longer avoid

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Dr. Ahmed Moustafa, Director & Founder, Asia Center for Studies & Translation, Egypt

In a city that has spent centuries translating the language of one civilization to another, the first East-West Forum arrived at a moment when the world itself seemed to have lost the vocabulary for talking across its divisions.

Held in Istanbul on Sept. 26–27 and preceded by meetings around the event, the forum brought together diplomats, academics, journalists, strategists and political thinkers from a wide range of countries. Hosted by Harici Media in partnership with the Berlin-based European Transcontinental Initiative, the gathering was conceived as an attempt to examine a world increasingly defined by competing power centers, regional wars, economic fragmentation, artificial intelligence and the erosion of confidence in institutions created after the Second World War. Harici reported that participants came from roughly 30 countries.

For us, the significance of Istanbul was not simply a matter of the speakers on the panel or the structure of the programme. Its deeper importance lay in the willingness to put difficult — and sometimes uncomfortable — questions on the table.

We would like to extend our sincere thanks and appreciation to my friend and brother, Mr. Tunç Akkoç, Founder and Editor-in-Chief of Harici Media, for his gracious invitation to a representative of the Asia Center for Studies & Translation, Egypt, to participate in the Forum as a speaker and commentator. His initiative in creating a platform where competing geopolitical narratives could meet directly deserves recognition.

In his opening remarks, Akkos stressed that the initiative was intended to establish a permanent platform where people representing different political and intellectual traditions and perspectives could meet and engage in direct dialogue.

This vision is particularly significant because the traditional language used in international relations has increasingly struggled to explain the realities of a rapidly changing world.

The Problem of Proxy Wars

During the session that discussed proxy wars in the region and ways to reach solutions to their crises, the Center put forward the view that the Middle East cannot simply be understood through the traditional map that divides the parties into “good” and “evil,” or into “responsible states” and “rogue states.”

Such terms, in our assessment, often reflect the perspective of powers that possess extensive influence over international media and financial and security institutions.

The Center particularly criticised what we see as political bias within important sectors of the Western media and some non-governmental organisations that receive Western funding. From our perspective, these institutions can, in some cases, move from being mere observers of geopolitical conflicts to becoming influential parties in the battle over the narrative and the story.

However, this view should remain open to debate and should not automatically be accepted as an absolute truth.

The more important question is not whether every Western journalist, every NGO, or every Western institution works to serve a single geopolitical agenda clearly, this is not the case, but whether the information environment itself has become so highly polarised that the public is now receiving radically different interpretations of the very same war.

In our assessment, the answer is increasingly approaching “yes.”

The problem becomes particularly clear when searching for the term “proxy wars” in the Middle East. Some of the first results focus on groups associated with Iran, including Hezbollah and the Houthis, as well as Hamas, whereas the history of regional conflicts is far more complex.

Al-Qaeda and ISIS emerged through different historical trajectories, with Anglo-Saxon support that was “created by Britain and the United States.” In environments dominated by the United States and Britain, Al-Qaeda emerged from the environment associated with Osama bin Laden and the Afghan jihad, while ISIS developed largely from Al-Qaeda in Iraq, under American sponsorship, to pursue a certain agenda in the region and advance the scenario of “creative chaos” promoted by Condoleezza Rice, the radical US Secretary of State.

At the same time, US policy toward Afghanistan during the Cold War contributed to shaping the broader environment from which some militant jihadist movements later emerged.

These distinctions matter.

Because propaganda often begins where complex historical details end.

Who Has the Right to Define a “Rogue State”?

The same problem appears in the vocabulary used to describe states.

Countries such as China, Russia, Iran and North Korea are frequently portrayed in Western strategic discourse as states challenging the existing international order.

Egypt, despite the different nature of its relationship with Washington, can also become the subject of criticism when its foreign policy does not conform to certain Western expectations.

The question is not whether these governments should be exempt from criticism. Of course not.

The deeper question is this: can the international system remain sustainable when one geopolitical camp increasingly assumes the authority to define which governments are legitimate, which movements are terrorist, which wars are defensive and which forms of resistance are acceptable?

That was one of the central questions behind our intervention in Istanbul.

The Middle East has repeatedly been presented through the lens of the “Iranian threat” as the principal strategic danger.

There is no question that Iran possesses significant military and regional capabilities, and that its policies are deeply contested by many neighbouring states. At the same time, reducing virtually every regional security problem to Tehran can obscure the interests and roles of other actors, including Israel, the United States, Gulf states, armed groups and local political forces.

The region has repeatedly paid a heavy price for simplistic interpretations of complex conflicts.

The Economics of Fear

The discussions in Istanbul also led us to a broader American question: to what extent can fear itself become a source of political and economic power?

Historically, the United States has experienced intense political campaigns shaped by perceived racial, ideological and security threats.

One does not need to accept every interpretation of this history to recognise that fear can become a factor with tangible economic consequences.

A 2020 study by Citi estimated that racial discrimination against Black Americans had cost the US economy approximately $16 trillion in lost economic output since 2000, based on an analysis of disparities in wages, education, housing and investment.

This figure demonstrates the extent of the economic losses associated with racial discrimination and exclusion. It also raises questions about the relationship between fear-based narratives concerning Black Americans, media influence, the political power of the gun lobby and the broader economic consequences of insecurity.

More importantly, however, the study highlights a fundamental point: bias and insecurity carry substantial and measurable economic costs.

The broader lesson has direct relevance to foreign policy.

When societies are continually presented with existential enemies, military spending and the expansion of security institutions become politically easier to justify.

America After Iran

In Istanbul, we also advanced the view that the United States after its confrontation with Iran in 2026 should not simply be understood through the traditional image of unlimited American power.

The conflict exposed economic and strategic vulnerabilities.

The Strait of Hormuz emerged as a major strategic pressure point for global energy markets, amid disruptions to international trade that forced governments and companies to search for alternative routes and supplies.

The consequences were reflected in oil prices and energy costs in Europe and elsewhere.

This does not mean that American power has disappeared. Rather, it suggests that military power is no longer synonymous with strategic control.

The rise of China, Russia, ASEAN, Iran and other centres of economic and diplomatic influence has made the international order increasingly complex and dispersed.

The East-West Forum itself reflected this reality, bringing together voices from Europe, Asia, the Middle East and North America while explicitly addressing multipolarity and the ongoing transformation of the global order.

America Is Changing From Within

The domestic dimension of American politics also deserves attention.

The emergence of figures such as Zohran Mamdani in New York and Abdul El-Sayed in Michigan reflects changes in the American political debate over inequality, foreign policy, healthcare, identity and the influence of established political and economic interests.

Their political trajectories should not be treated as evidence of a predetermined future for the United States.

They do, however, illustrate how issues that were once treated as peripheral including the costs of war, US policy toward Israel, economic inequality and the political influence of younger and more diverse generations have moved closer to the centre of American political debate.

This is another reason why East-West dialogue cannot remain confined to foreign ministries and military institutions.

A Dinner for Dialogue

One of the most memorable moments on the margins of the Forum was the private dinner held on the evening of Friday, September 25, hosted by H.E. Mr. Hasan Capan, Chairman of the Turkish-Chinese Friendship Foundation, and H.E. Ambassador Ersin Erçin, Vice Chairman of the Foundation, in honour of the speakers and participants.

We extend our sincere thanks and appreciation to both of them for their generosity, friendship and support.

The gathering was more than simply a dinner. It provided an opportunity for personal interaction, an exchange of ideas and the building of relationships among participants — precisely the kind of human diplomacy that formal conferences sometimes lack.

Real dialogue does not always begin behind conference podiums.

Very often, it begins around a single table.

Istanbul’s Larger Message

The first East-West Forum should be regarded as the beginning of a dialogue, not the end of a debate.

The organisers have already articulated a vision of transforming the initiative into an annual gathering in Istanbul, developing expert working groups, establishing an East-West Forum network and potentially creating a business council capable of connecting intellectual dialogue with economic cooperation.

This may ultimately prove to be one of its most important contributions.

The world that emerges from the current conflicts including the crisis surrounding the Strait of Hormuz will require more than ceasefire agreements.

It will require a new conversation about security, energy, sovereignty, development, technology and coexistence.

Istanbul is an exceptional setting for such a dialogue. One participant even proposed moving the headquarters of international organisations, including the United Nations, to Istanbul.

For centuries, the city has stood between two continents without belonging exclusively to either.

The East-West Forum can follow the same principle: not choosing one civilisation against another, but creating a space in which East and West can confront their differences without turning disagreement into permanent conflict.

For this reason, we see the Istanbul gathering as an announcement of intent.

It was not an attempt to erase differences.

It was an attempt to make dialogue possible despite them.

At a time when proxy conflicts increasingly risk evolving into direct confrontations, this may be among the most important political conversations the world can undertake today.

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A new world in the East, old dogmas in the West

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Much commentary followed the US president greeting the visiting Chinese leader at the foot of the aircraft stairs: both because a US president had not done so in many years, and because the leader he welcomed heads a state that the US defines as a competitor, an adversary, and an enemy. That photograph demonstrated that the US itself now recognizes China not merely as an economic power, but as a political, military, scientific, industrial, and technological one; yet it revealed other realities as well.

It showed that a multipolar order has arrived. It showed that the failure of the US to abide by the order whose rules it laid down and whose institutions it established has exacted a heavy toll on the US itself. It showed that the US-centric Atlantic system is unravelling. It showed that the collapse of a world order flouted, and indeed subverted, by its own rule-maker is both legitimate and inevitable. It showed that East-centred institutions, such as the Shanghai Cooperation Organisation and BRICS, enjoy an open path against Western-dominated bodies. It showed that the US regards China as a rival not merely economically, but ideologically and technologically. It showed that the US has proven unable to exercise deterrence against China, Russia, and Iran to the degree it desires.

Let us admit it: after the Cold War ended, the US assumed it could act as it pleased by bringing the European Union to its side and constantly invoking human rights, democracy, and freedom. It was mistaken. The more it spoke of a rules-based world order, of a liberal world order, the more it flouted those very rules. In the end, that order collapsed as well. The birth of a multipolar, multilateral, and multicentric world accelerated; and it was just as well. Now is the time to debate the rules, institutions, traditions, and solutions of this new order.

Yet who will conduct this debate? Who will take part in this search?

It is not right to expect this from the US; nor is it realistic. It is likewise impossible to expect it from the European Union. Europeans follow so subserviently in Washington’s wake that they refuse to consider even Russia as European, despite the fact that, alongside its Eurasian identity, millions of its citizens live across territory spanning Europe and Asia while viewing their nation as historically, politically, socially, culturally, artistically, and intellectually European. They attempt to construct a European defence and security architecture by excluding Russia, in defiance of Russia, and by harbouring hostility toward Russia. In the end, they are both mistaken and defeated.

As the new order emerges, India must also be examined under a distinct heading, alongside China and Russia. For India is a nuclear power possessing the world’s largest population and its 5th largest economy. It maintains disputes with China and Pakistan, yet enjoys good relations with Russia, the US, and Britain. It is a member of both the SCO and BRICS. On the other hand, within the Quad grouping, alongside the US, Japan, and Australia, it positions itself against China.

In summary, as an order takes shape in which the West runs out of breath while the East rises, and Atlantic institutions dissolve while those of Eurasia and the broader Global South come to the fore, we must first rid ourselves of Cold War dogmas and habits.

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Neither Turkic states heed us, nor does anyone ask us on Syria

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At the NATO summit held in Ankara last month, US President Donald Trump made promising remarks to Türkiye regarding the lifting of CAATSA sanctions, clearing the path for the sale of F-35 fighter jets to Türkiye, and supplying the engines required for the domestic Kaan aircraft. He has yet to keep his word.

This is quintessential Trump. He is neither a reliable nor a predictable leader. He approaches diplomacy like a merchant. In bargaining, he opens with the highest possible bid. Rather than institutional consultations, negotiations, formal diplomatic channels, and classical statecraft, he favours personal ties, bilateral encounters, and leader-to-leader diplomacy. He is notoriously erratic. A figure he praises one day, he drags through the mud the next, humiliating, scolding, and even insulting them.

US moves in the Mediterranean

Failing to honour the promises made to Türkiye, the US eased and partially lifted the arms embargo it had enforced on the Greek Cypriot Administration (GCA) since 1987 in 2020, before abolishing it entirely in 2022. Not content with this, the US signed a military cooperation agreement with the GCA in 2024 and hosted its leader at the White House. The GCA, whose path to acquiring weaponry from the US was cleared in 2024, has also recently been deepening its relations with France. Even though two British sovereign bases already exist in the southern part of Cyprus, with the US utilizing them whenever necessary, both the US and France signed separate basing agreements with the GCA. The GCA’s relations with Israel are also remarkably sound, as are those with Qatar. Meanwhile, relations between Greece and France have been exceptionally warm in recent years.

Amid all these tangible developments, Türkiye has largely relinquished its vigilance regarding the Blue Homeland. Drilling vessels and seismic survey ships have been withdrawn from the eastern Mediterranean.

The most distressing of these developments has been that four Turkic states in Central Asia (Kazakhstan, Uzbekistan, Turkmenistan, and Kyrgyzstan), none of which officially recognize the Turkish Republic of Northern Cyprus (TRNC) as a state, expanded their ties with the GCA and opened embassies in exchange for European Union financial assistance. Through this recognition, by acknowledging the Greek Cypriot Administration as the sole representative of the entire island under the name of the Republic of Cyprus, they effectively rejected the existence of the TRNC, whatever they might claim to the contrary.

Whatever anyone may say, and from whichever angle one evaluates it, the conduct of these four friendly and brotherly states cannot be explained merely by their lack of loyalty or their disregard for Türkiye’s sensitivities on this matter. Alongside this, one must acknowledge the failure of Turkish foreign policy. If Türkiye cannot convince even fellow Turkic states, let alone others, on an issue where its position is most legitimate and justified, such as Cyprus; if, far from persuading them, it cannot prevent them from cultivating relations with the GCA and opening embassies, this represents a monumental failure on the part of Turkish foreign policy.

Moreover, the failure in the Mediterranean is not confined to Cyprus. There is more.

Who is sidelining Türkiye in Syria?

Türkiye is persistently excluded from European-organized meetings on Syria. Türkiye’s views are not sought. So much so that even Qatar, our closest ally in the Arab world, on whose soil we established a military base and to whom we sold major assets, does not hesitate to take part in initiatives that exclude Türkiye from energy projects in the Eastern Mediterranean, or to cooperate with Greece and the Greek Cypriot Administration.

Much has changed in Syria since the days when Ahmet Davutoğlu, former prime minister, former foreign minister, former AKP chairman, and leader of the now-dissolved Future Party, carried away by his own momentum, declared: “Not a bird can fly in the Middle East without our knowledge”, “We know the Middle East street by street, inch by inch”, and “We are the masters, pioneers, and spokesmen of the emerging Middle East”, all while eagerly seeking to act as a subcontractor on behalf of the US. The regime has changed. The government has changed.

So let us ask: did we get what we wanted?

Israel, which most recently struck Abu al-Duhur Military Airbase east of Idlib in northern Syria; Israel, a backer of the PKK-PYD-YPG terrorist organization; Israel, which usurped Syrian land in the Golan Heights, attacking Syria and rolling in its tanks whenever it pleases; Israel, which seeks to partition Syria into four entities (Kurdish, Alawite, Arab, and Druze): Israel got what it wanted. And it continues to do so.

Does Israel, which directs scathing rhetoric at Türkiye, fortified by immense US backing and sustained by Europe’s three major powers (Germany, Britain, and France), draw this audacity solely from the imperialist powers standing behind it? Or does Türkiye’s inefficacy in the Turkic world and across the Arab sphere, alongside that backing, also embolden Israel?

In answering this question, we will arrive at a far more accurate assessment if we take into account the depth of Israel’s relations with Azerbaijan.

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