Slowdown causes escalation in Taiwan

China's domestic economic woes are prompting fears that Beijing could compensate by escalating the risk of a war with the U.S. over Taiwan, according to experts who closely follow the U.S.-China rivalry.

And China's economic slowdown, already evident in slowing growth, plunging exports and the increasing municipal debt, unemployment and deflation, is likely to worsen if other nations follow the U.S. lead in restricting investments in China.

A man crosses the road near the central business district in Beijing, July 17, 2023. China's economy grew at a 6.3% annual pace in the April-June quarter, much lower than analysts had forecast given the slow pace of growth the year before.

"China may act more aggressively in the near term — as its military capabilities mature — to lock in gains while it still has the chance," said Hal Brands, who served as special assistant to the secretary of defense for strategic planning in 2015-16 in the Obama administration. He is now the Henry A. Kissinger distinguished professor of global affairs at the Johns Hopkins School of Advanced International Studies.

"This is why the danger of a war over Taiwan, for instance, is highest in this decade — because China will have more military capability than ever before, just as it peaks and starts to decline economically, relative to the United States," said Brands, author of Danger Zone: The Coming Conflict with China.

Brands said historically, rising great powers have become more aggressive when their economies slow and geopolitical troubles multiply.

"China is facing these problems today. As China's economy struggles, it will find it harder to overtake the United States as the world's leading power," he said.

President Joe Biden signed an executive order on Wednesday prohibiting U.S. venture capital and private equity firms from investing in China's advanced technologies that could threaten U.S. national security.

Chinese Embassy spokesperson Liu Pengyu told VOA's Korean Service on Thursday that Beijing is deeply concerned about Biden's move.

"Despite China's repeated expression of deep concerns, the U.S. went ahead with new investment restrictions," said Liu. "The Chinese side is very disappointed at this."

Liu continued, "The latest investment restrictions will seriously undermine the interests of Chinese and American companies and investors, hinder the normal business cooperation between the two countries and lower the confidence of the international community in the U.S. business environment."

China has become increasingly aggressive in the South China Sea, using its naval presence to back its sweeping claims to sovereignty over tiny islands and what are estimated to be the sea's vast reserves of untapped oil and natural gas. Beijing's claims have angered competing claimants, including Vietnam, the Philippines, Taiwan, Malaysia and Brunei.

Beijing has also increased its military presence in the Taiwan Strait, where the U.S. has been exercising freedom of navigation to counter China's aggressive stance against the self-governing island of Taiwan, which Beijing considers its own territory.