The United States is still the world’s only superpower, and it’s not going to give up the title easily to China or any other challenger.
China Closing Gap with America
Here’s what The Economist says in a leader (Oct. 24, 2009): “China’s economy is still less than a third the size of America’s…Its Gross Domestic Product per head is one-fourteenth that of America. The innovation gap between the two countries remains huge. America’s defence budget is still six times China’s.”
China is, of course, catching up but, says The Economist, it “has neither the clout nor the inclination to challenge America.” However, with a population of 1.338 billion versus the 307 million Americans, China would seem to hold the advantage in the long run.
China’s Economic Expansion
In 1978, China abandoned much of its Communist dogma and started to follow a more capitalist path. Since then the Chinese economy has been growing at double digit rates in most years, even hitting 15 percent in 1984.
It has achieved this growth by encouraging foreign manufacturers, many of them American, to set up factories in China. It has also built many manufacturing plants of its own.
The output from these industrial enterprises has been gobbled up by the rest of the world. Low wage rates mean that Westerners can buy their electric kettles, clothing, and plastic knickknacks for less money than when they made these things themselves.
Despite the business downturn of 2008-09 the economic website chinability.com says that, “In 2009 China’s GDP growth rate, though lower than the double-digit average of recent years, has held up well, rising from 6.1 percent year-on-year in the first quarter to 7.7 percent in the first three quarters of the year.”
Huge Trade Imbalance Weakens America
With all the export cash flooding into China a huge trade imbalance with the rest of the world has developed. This has had a profound effect on the global economy. The United States is now the world’s largest debtor nation and China has become the world’s biggest creditor country.
According to Harvard University economist Kenneth Rogoff, China now owns about $4 trillion of American debt. This is strong evidence that the economies of the two countries are meshed together. China is in so deep with U.S. debt that it must keep propping up the greenback, because if it doesn’t and the dollar tanks, China will be left holding a bag full of money worth a lot less than when it bought it.
China could ruin the American economy by dumping all the U.S. government debt it owns on the open market. But, doing that would also ruin the Chinese economy. As China Daily put it in July 2009, this is the “foreign-exchange version of the Cold War stalemate based on ‘mutually assured destruction.’ ”
Economics Prompts Cooperation
That economic reality ties the two nations together and forces them to play nice. Indeed, U.S. Secretary of State Hillary Clinton said so in a speech to the Asia Society in New York (Feb. 13, 2009): “Some believe that China on the rise is by definition an adversary. To the contrary, we believe the United States and China benefit from, and contribute to, each other’s successes.”
Diplomacy demands that such things be said, but the reality is the relationship between the U.S. and China is changing. In an article in the Globe and Mail (Nov. 14, 2009), the newspaper’s Beijing correspondent, Mark MacKinnon relates how China is growing in confidence while the U.S. is suffering because of its relative economic weakness.
MacKinnon quotes Russell Leigh Moses, a Beijing-based analyst of Chinese politics. On the eve of U.S. President Barack Obama’s visit to China he said: “I think [the Chinese leadership was] never more assertive than what we’re seeing in the weeks leading up to [Mr. Obama’s visit]. I don’t see aggressiveness, but I see a self-confidence and self-certainty.”
MacKinnon sums up by writing that, “Chinese strength and America’s struggles during the global recession have emphasized that the balance of power is shifting.”
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