After the 2026 State Visit by Donald Trump to China, Xi announced a new Constructive Stability Strategy to prevent SuperPower confrontations.
The graphic above presents two future forecasts for CN1, the first state variable component of the CNL20 model. The upper graph shows the time path of the unstable system: Exponential growth forever. The lower graph shows the time path for the stabilized system: Steady State after 2152--a long time in the future.
The graphic makes the point that growth in China can continue well into the future under a stable, less Authoritarian Economic System.
The next question is: How much effort would it take to stabilize the system? The answer is that a relatively small change in growth rates would put the Economy of China on a stable growth path. Compare the "unstable" system matrix (F) in the Notes below to the "stable" System Matrix. The diagonal elements of F (the growth rates) have been lowered only slightly to create a stable system. And notice that CN2, the Malthusian-Unemployment controller is still quite reactive (above unity). In other words, the Authoritarian System can still keep a tight control on Unemployment and stabilize overall growth.
China can evolve into a stable system without practical limits on the overall Growth rate of the System!
If this is what the Constructive Stability Strategy actually means, it is quite doable. A similar stability program could be applied to the US_LM model** but the results would be very different, creating a wildly cyclical system. For this (and many other reasons) I would not expect the US to cooperate in Constructive Stability Strategy regime.
Notes
System Stability is determined by the Eigenvalues of the System Matrix, F.
** Instructions for stabilizing the US_LM model are contained in R-code on the Google Site. Also notice that the US_LM model is not a Malthusian model; control of employment involves the Export Market. But, there are Malthusian overtones (see the US_LM Measurement model below). Similar instructions are available for the CN_LM model and are available in the Google site (here).
For more posts see Blog Roll: China.
CNL20 Measurement Model
Three component state variables explain 99.4% of the variation in the indicators: CN1 = (Growth - LU) is an historical growth controller, meaning that growth is directly controlled in an Authoritarian economy, compared to the USL20W model where overall growth does not have an historical controller. CN2 = (LU - L) is a Malthusian-Unemployment Controller. CN3 = (KOF-E) is a Globalization-Unemployment-Energy controller.
Indicators are taken from the World Development Indicators, KOF is the KOF Globalization Index, EF is the Ecological Footprint and HDI is the Human Development Index (notice that the HDI is not heavily weighted in any of the state variables). The Measurement Model and resulting Historical Controllers are statistically estimated from data using Principal Component Analysis.
CNL20 Unstable System Matrix
The Malthusian-Unemployment Controller CN2 = (LU - L) is the main source of system instability.
CNL20 Stable System Matrix
The system is stabilized by slightly reducing the values of all diagonal elements in F (the growth rates).
US_LM Measurement Matrix
The US_LM Model Measurement Matrix contains three component state variables: US1 = (Overall Growth), US2 = (X+XREAL-N-L) Export-Population Controller and US3 = (L + XREAL - X- N) Employment-Export-Population Controller. US2 and US3 have Malthusian overtones since Population (N) is involved in each historical controller. Notice that the US_LM Model is not an Authoritarian System because growth does not have an historical controller (as it does in the CN_LM model).
You can run the US_LM Model on my Google Site (here). Instructions in the R-code explain how to stabilize the model.
