China's ascent is not so certain

Posted: October 09, 2011

These are difficult times for the United States. Its post-2008 recovery has slowed, and some observers fear Europe's financial problems could tip the American and world economy into a second recession. American politics remain gridlocked over budget issues, and compromise will be even more difficult on the eve of the 2012 election. In these circumstances, many are predicting America's decline, especially relative to China.

And it's not just pundits. A recent Pew poll found that in 15 of 22 countries surveyed, most people believe China will replace or has replaced America as the world's leading power. In Britain, those putting China on top rose to 47 percent, from 34 percent in 2009. Similar trends are evident in Germany, Spain, and France.

Indeed, the poll found more pessimistic views of the United States among its oldest and closest allies than it did in Latin America, Japan, Turkey, and Eastern Europe. Even Americans are divided equally over whether China will replace the United States as a global superpower.

Such sentiments reflect the slow growth and fiscal problems that followed the 2008 financial crisis, but they are not unprecedented. Americans have a long history of incorrectly estimating their power.

In the 1950s and '60s, after Sputnik, many thought the Soviets might get the better of America. In the '80s, it was the Japanese. Now, it's the Chinese. But, with America's debt poised to match its income in a decade, and a fumbling political system that cannot seem to address its fundamental challenges, are the "declinists" finally right?

Much will depend on the uncertainties, often underestimated, surrounding future political change in China. Economic growth will bring China closer to America in resources, but that doesn't necessarily mean China will surpass it as the most powerful country.

China's gross domestic product will almost certainly surpass the United States' within a decade, owing to the size of its population and its impressive growth rate. But in per-capita income, China will not equal America for at least decades.

Moreover, even if China suffers no major domestic political setbacks, many current projections are based simply on GDP growth. They ignore U.S. military and soft-power advantages, as well as China's geopolitical disadvantages. As Japan, India, and others try to balance Chinese power, they welcome an American presence.

As for absolute decline, the United States has very real problems, but its economy remains highly productive. America remains first in research and development expenditures, university rankings, Nobel Prizes, and indexes of entrepreneurship. Moreover, America remains at the forefront of cutting-edge technologies, including biotechnology and nanotechnology. According to the World Economic Forum, it has the fifth most competitive economy in the world (behind the small economies of Switzerland, Sweden, Finland, and Singapore). China ranks only 26th.

This is hardly a picture of absolute economic decline.

Some observers worry that American society will become sclerotic, like Britain at the peak of its power, a century ago. But American culture is far more entrepreneurial and decentralized than Britain's was.

And despite recurrent bouts of concern about immigration throughout its history, America reaps huge benefits from it. In 2005, foreign-born immigrants had participated in 25 percent of technology start-ups in the previous decade. As Singapore's Lee Kuan Yew once told me, China can draw on a talent pool of 1.3 billion people, but the United States can draw on the world's seven billion, and it can recombine them in a diverse culture that enhances creativity in a way that Chinese nationalism cannot.

Many commentators worry about America's inefficient political system. True, the Founding Fathers created checks and balances designed to preserve liberty at the price of efficiency. Moreover, this is a period of intense partisan polarization. But nasty politics is nothing new to the United States. American government and politics have always experienced such episodes, and, though overshadowed by current melodramas, they were sometimes worse than today's.

America faces serious problems: public debt, weak secondary education, and political gridlock, to name just a few. But one should remember that these problems are only part of the picture - and they can be solved over the long term.

Of course, whether America can implement the available solutions is uncertain. Several commissions have proposed feasible plans to change its debt trajectory by raising taxes and cutting expenditures, but feasibility is no guarantee that they will be adopted. Still, Lee is probably right that although China "will give the U.S. a run for its money," it won't surpass it in overall power in the first half of this century.

If not, the gloomy predictions of absolute American decline will turn out to be as misleading as similar predictions in past decades. And while the "rise of the rest" means America will be less dominant than it once was, China will not necessarily replace the United States as the world's leading power.

Joseph S. Nye is a former assistant U.S. secretary of defense and a professor at Harvard. This was distributed by Project Syndicate.

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