International,  US

Why China won’t overtake the U.S as the next Superpower

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Never before in modern history has the world witnessed a rise so spectacular – a nation transforming within a few decades from a relative backwater to today the world’s second-largest economy. With a labor force of 800 million, the largest domestic market, the largest manufacturing and export industry and a still stellar annual growth rate, many commenters, from the likes of Paul Kennedy to Niall Ferguson to Jeffrey Sachs, have boldly claimed China as the next world hegemon, usurping America in the near future. However, such an assumption is misplaced. If we define power as the ability to influence as well as resist influence, a large robust economy alone does not guarantee a state to the status of a Superpower. Hardly will there be a shift in the balance of power towards the East even as the U.S declines in economic importance.

American Influence

The hard power projection capability of the United States should not be underestimated. As of 2019, the U.S outspends the next 10 great military power combined, possess more aircraft carriers than rest of the world combined, the second-largest nuclear stockpile after Russia and there is a joke among some circles that after the United States Airforce, the second most powerful Airforce in the world is that of the US Navy. This projection of hard power is further augmented by its historical military alliances and pacts with European and Asian great powers as well as numerous bases scattered around the globe. Even if China does achieve military parity with the U.S in the future, which it possibly could, other great powers in the region such as India, Japan and possibly even Russia would unlikely remain passive in the advent of Chinese military buildup and could seek closer ties with the U.S as a counter.

A second decisive advantage the U.S enjoys in its relations to other countries compared to China is in the realm of soft power. With English being the chief international language and the default language of the internet, America’s cultural influence through its global brands and entertainment industry puts it in a far more favorable light than most other great powers. The soft power advantage of the U.S should not be taken for granted as it helps to justify its international actions. Actions that, in case of other great powers, would risk alienation from the international community. No other great power today can invade a country without legitimate justifications and still retain the goodwill of most other states. Invasion of Iraq did not bring the U.S alienation, did not create a military buildup in other great powers and did not create suctions for the U.S. Russia’s invasion of Crimea brought its economy to near ruin as a result of alienation and punitive response from the international community. It helps to have a good image when you break the rules. To put things into perspective – image a scenario when China invades another country, does it have the soft power to persuade others that its actions are justified? As a result of cultural globalization, the soft power advantage of the US is only likely to increase. This of course, in realist terms, confers another advantage to the US over China.

American Allies

There is no denial of the fact that China will overtake in absolute terms the U.S as the world’s largest economy in the near future and by extension, eventually may become the largest military spender. However, even as a power in decline, the U.S, by virtue of its immense soft power, can engage in buck-passing – delegate some of its responsibilities to other states. China neighbors two other great powers, Japan and India, both more friendly to the U.S. In a realist political arena that is Asian diplomacy, Japan and India can be used by the U.S as a counter to balance the influence of China and limit its international power projection. While, arguably, both great powers may not always align themselves with the interest of the U.S, they will be more inclined towards siding with a distance Superpower than a rising power at their doorstep with which they have territorial disputes and often hostile nationalist sentiments.

Geopolitics

In terms of geopolitics, the United States has been endowed favorably, being surrounded by the two sides by vast oceans which also grants it easy access to the other two great economic cores – East Asia and Western Europe respectively. In the North and South, the U.S is neighbored by fairly weak satellite states, Mexico and Canada, heavily reliant on U.S consumer base for its own industries. Its vast continental-size, abundant with natural resources and fertile soil for agriculture, makes it fairly shielded from the effects of international volatility of raw resource prices. An important but often ignored aspect of geopolitics, the climate zone, should be pointed out in explaining the inherent advantage the U.S enjoys over emerging powers such as China and India. The U.S is the largest country to lie in the temperate zone. It should not be taken as a coincidence that the richest and most industrialized countries lie within this region. The temperate region is the golden spot for development, neither suffering from the high disease burden that hinders the growth of human capital in tropical countries or high transport costs that hinder labor mobility in cold regions.

In contrast, China’s geopolitical endowment is extremely unfavorable, with powerful competing neighboring countries in the North, East and South. China has, relative to the size of its population, little agricultural land and that too highly vulnerable to the effects of climate change, desertification and industrial pollution. Aside from coal and rare earth metals, China possesses few natural important natural resources. Most of China’s population lie within the tropical zone and suffers from a high disease burden, further aggravated by high pollution levels.  High disease burden ultimately impacts the quality of human capital and hence productivity and innovation within a nation. While advancement in health and lifestyle can mitigate this effect, it would still come as an opportunity cost for other areas worth investing in. This gives the U.S with its low disease burden a major edge over China over a long-term period.

The Challenge of Demography

China today has the largest skilled labor force in the world, add to the equation competitively low wages and it gives the Chinese economy a huge comparative advantage over other countries. Yet, while the quality of productive human capital will increase, the quantity of productive human capital is expected to decrease over the next decades, risking eventual stagnation in the economy, similar to what Japan today is facing. China is expected to suffer the worst demographic crisis ever to surface in history, a decline so abrupt that China would need a miracle to remain economically unscathed from the demographic decline. It is projected that by 2050, the median age of the country would be 56 years with nearly 1 in 3 Chinese citizens would be over the age of 65, putting immense strain on the State as well as on an increasingly shrinking workforce. Lack of a comprehensive social and family security net and a pensions crisis could likely evolve into a full-blown humanitarian catastrophe if trends are allowed to continue the way they are.

Comparatively, the U.S will continue to see a sustainable demographic rise, with a decline in birth rates being offset by the rising immigration. Unlike old world countries, U.S social institutions (and that of other European settler-states) have historically been shaped to accommodate and assimilate migrants, allowing for a highly cosmopolitan culture that facilities integration. By 2050, the median age would 44 and only 23.5 percent of the U.S population is expected to be of retirement age. This trend alone could allow the U.S to catch up and overtake the Chinese economy in the later part of the century.

Innovation, MNCs and Globalization

Economists and political scientists have long recognized the critical role technology plays in the growth of the economy and in the transition of power between states. It must be appreciated that China already is by far the global leader in innovation if we count by the number of patent applications filed each year, becoming the first country to file a million patents within a year. Already, annually, the number of STEM students that graduate each year from Chinese universities exceed those in the U.S by a factor of 8 times. China’s investment in Research & Development over the period of 2010-15 grew by over 14 percent while that of the U.S only by 4 percent. However, such a statist perspective is outdated in today’s heavily globalized world and only by looking at the wider perspective does a fuller picture emerges.

Multinational Corporations are today’s driving force behind global innovation and economic prosperity.  In Fortune Global 500 (2018) that ranks the world’s largest corporations, both the U.S and China had nearly an equal share of companies. Yet, if one looks at the details, one can surface a few key facts namely: a) that the majority of Chinese companies in the list are government-owned, b) that few of them have extensive operations and affiliates outside of China, c) that U.S companies still remain world leaders in the most important and advanced industries such as Defense, Computers & semi-conductors and Information Technology. While China excels in the quantity of patents, the U.S excels in quality. Innovation within the U.S may have been on a relative decline but that is only because most of the low-level research and development by American MNCs have moved abroad. Many of the patents filed in other countries are in the ownership of these MNCs or their local subsidiaries, ultimately diffusing the benefit of R&D to the home country.

Journalists in recent years have also commented negatively but correctly on the health of the U.S economy, citing the growing National debt, budgetary crisis, rising inequality and low-savings rates. Yet China too suffers from its own economic woes, an eventual and rapid shrinking of the workforce, a massive real estate bubble and an increasingly unmanageable private sector debt. It must be noted that virtually all industrialized countries today are facing economic problems as they try to adjust to perhaps the most disruptive period of modern history, surpassing even the significance of the Industrial Revolution. Ultimately, in a globalized world with capital increasingly mobile and volatile, countries with greater stability, transparency and certainty are set to benefit the most (or alternatively, suffer the least) in the long term. In all three aspects, the U.S enjoys an advantage over China.

Democracy vs. Authoritarianism

Perhaps the greatest asset and biggest advantage the U.S has over China is that it is a democratic Republic. There exist some who may tout democracy as a worse political system than an authoritarian regime, giving reasons that democracies are less decisive when it comes to policy change and are unable to commit to long term unpopular but needed reforms. However, the reason a democratic regime is a more powerful system than authoritarian one has to do with legitimacy. It is easier for a government in a democratic system to claim legitimacy as they are voted to power by the ordinary people to rule over them. In an authoritarian system, where people have no say in politics, it is far harder to maintain a belief that a regime should have the right to rule over the people. In case of a crisis, people in a democratic country can just vote in a new government. Authoritarian regimes when it comes to crisis eventually fall apart as ordinary people dissatisfied with the government have no formal mechanism to replace them, only the instrument of active political unrest.

China, like the post-Stalin Soviet Union, is a post-totalitarian regime or a regime that can no longer appeal to ideology to keep its legitimacy intact. Instead, it relies on improving the living standards of ordinary people as a means to retain their support for the government. However, as discussed above, the slowdown of economic growth remains a real risk in the future for China and it is only when a nation goes through a crisis that the strength of its political institutions are truly tested. The example of USSR is a case in point – a Superpower that disintegrated as soon as the common citizens lost faith in the Soviet government. We can point to the strength of U.S political institutions by the fact that through the country’s inception, they have changed relatively little, despite numerous crisis the country has faced in its nearly two and a half-century-long existence. Whether the Communist government of China can survive a crisis should it occur remains to be seen but modern history has shown itself to be unkind to authoritarian regimes when it comes to political stability.

 

Additional note

Nothing, of course, is ever set in stone. Existing global trends can change and perhaps, contrary to our article, we may actually witness the rise of China as an international hegemon. One of the ways this can happen is if China becomes become democratic; not necessarily in the exact style of Western liberal democracies but a system where ordinary citizen do exercise real influence on the country’s politics. Right now, the Chinese state spends more on domestic security than on its defense. Internal threats to political stability are less likely when citizens are given a real stake in governing policies and this can free up resources for a state to concentrate on increasing its international power projection and influence. Another area when China can capitalize on in a bid to become a Superpower is in the realm of ideas. The Soviet Union arguably had a far smaller economy than the US and in the later decades, was surpassed even by Japan. Yet, because it provided an alternative model to that of Liberal Capitalism, it was able to exert influence far greater than a state of its economic size would have otherwise. If China can transition into a truly distinctive “Chinese” model, it may not need to remain economically ascendant to be influential as it may enjoy broad appeal among factions in opposition to Western discourse. We can also not rule out the possibility that the U.S could become increasingly isolationist in the future, in which case, China could really become the next Superpower but though, not an absolute hegemon.

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