Friday, January 29, 2021

Is China Now Number One?

 Actually I think focusing on such questions can be a not very useful exercise, but here I am asking it anyway.  As it is, indeed the Peoples' Republic of China (PRC) is indeed Number One on a number of important grounds, although probably the bottom line is that the world is now dominated by a G2, the US and China, with it unclear which is Number One overall.  What has happened is that up until quite recently there was no question: the US was Number One as it had been for a long time.  That is not the case now.

Probably the most important fact lying behind PRC moving into a possible Number One position is that it indeed does have in real PPP terms the world's largest aggregate GDP, probably on the order of 30% higher than the US's, with this gap continuing to grow.  Most people are unaware of this, and it is hidden by the fact that the US continues to be Number One on nominal GDP, which gets constantly reported in the US media with no commentary or recognition of the situation regarding PPP GDP.  As it is this complicated situation signals the likely current quasi-equality, because indeed nominal GDP is important as it reflects the ability of a nation to assert itself globally.  But PPP does show how much it is really producing. And, assuming current trends hold, PRC probably will surpass the US even on nominal GDP within the next several years, almost certainly before the end of the decade.

Another important matter is that sometime in the last few years China replaced the US as the world's leading financier of development. Indeed, the PRC has accepted this role in a coordinated plan of action, its Belt and Road Initiative, which has come under some criticism by some nations for various reasons, including that it is an effort to achieve a dominance over the nations involved in this.  But whatever the truth or falsity of that, this initiative is indeed leading to large scale infrastructure expansion in many nations that will aid their future economic growth.  The US is not remotely providing such aid, and also is not going to be doing so.  This places China in a very important position regarding the world economy, a position once held by the US.

Of course there are some areas where the US is still ahead. One involves military.  China's military is growing and expanding, and it probably has the ability to cause US forces more damage in a conflict than many might expect, such as the ability to knock out an aircraft carrier and compete seriously in cyber and space warfare.  But the bottom line is that if there were a full-blown war, the US continues to maintain an overwhelming edge.  But let us hope we do not have to see such a test, although such comparisons are obviously important.

Certainly there are many other areas where the US retains the edge, even as PRC is rising in many of them. So in the crucial area of scientific and intellectual developments there is rising competition, but the US continues to broadly have the lead, even as China is taking it in various areas, some of them quite important, such as developing solar energy technology.

Needless to say the last four years has seen the US shooting itself in the foot on all this during the presidency of Donald J. Trump.  "America First" led to America Second or worse.  Angering allies and simply removing the US from so much going on in the world and violating treaties, left China as the relatively responsible party at the global level, and while China has engaged in hostile actions towards some neighbors, at the global level it looks more responsible than has the US, although this latter may be changing with the change in administrations in the US.

Anyway, clearly these two nations are global level competitors, with a long run trend tending toward the advantage of China, at least as it seems now.  But let us hope this relationship can be managed without actual war breaking out.

Barkley Rosser

23 comments:

Anonymous said...

Brilliantly important and necessary essay.

China's development these 40 years has been benign and hopeful, and the governing intent is that it remain so:

http://www.xinhuanet.com/english/2021-01/25/c_139696610.htm

January 25, 2021

Special Address by Chinese President Xi Jinping at the World Economic Forum Virtual Event of the Davos Agenda

BEIJING -- Let the Torch of Multilateralism Light up Humanity’s Way Forward

Anonymous said...

January 29, 1979

Deng Xiaoping was visiting the United States, from Texas to Washington in friendship and hope and meeting with Jimmy Carter. The Chinese continue to celebrate the visit and meeting.

Anonymous said...

https://twitter.com/SpokespersonCHN/status/1355102105199992839

Hua Chunying 华春莹 @SpokespersonCHN
China government account

This day 42 years ago:

[ https://pbs.twimg.com/media/Es5KJvmVcAAI4rQ?format=jpg&name=small ]

5:34 AM · Jan 29, 2021

Anonymous said...

As for the Belt and Road Initiative, the BRI now includes 46 member states in Africa alone, from Botswana to Ghana and across to Ethiopia and to the Congo and even to the Seychelles... Branko Milanovic makes the analogy to the Marshall Plan following WWII.

Anonymous said...

Silk Road and economic relationships are very similar to Marshall Plan and part of a long-term plan while we have trouble even getting the Common Core education approach through to become more competitive...here are some articles on China's objectives:

https://ndupress.ndu.edu/Media/News/News-Article-View/Article/2383310/is-china-expansionist/

https://inss.ndu.edu/Media/News/Article/2412750/china-next-steps/

https://inss.ndu.edu/Portals/68/Documents/stratforum/SF-305.pdf

https://www.whs.mil/News/News-Display/Article/2389504/chinas-strategic-objectives-in-a-post-covid-19-world/

Anonymous said...

Thank you for the reference articles.

2slugbaits said...

China does have one serious political problem, and that's a clear line of succession after Xi leaves the stage, which will happen sooner or later. Transitions of power can always be dicey in totalitarian regimes because, as Hannah Arendt taught us, totalitarian regimes resemble an onion with layers surrounding a center. I would say that a predictable and smooth transition of power is something the US doesn't have to worry about, but with today's QAnon crazed GOP I'm a little less sure about that.

China also has at least two geopolitical problems; its neighbors include Putin's Russia with grand designs of the old empire as well as a young and increasingly authoritarian India. China shares a lot of borders with several none too stable nuclear powers.

Anonymous said...

"Russia with grand designs of the old empire..."

Please explain what this means when possible.

Anonymous said...

Transitions of power can always be dicey in totalitarian regimes...

[ Forgive me, but possibly this can be explained as well. ]

Anonymous said...

Transitions of power can always be dicey in totalitarian regimes...

[ China has had no problem with leadership transitions since Deng, and the regime characterization would not seem to apply to China. ]

rosserjb@jmu.edu said...

2slugbaits,

China had the succession issue under control with a pattern of having a leader in for two ten year terms, with the leader and the Standing Committee of the Politburo of the Central Committee of the CCP. Xi has blown that with essentially asserting a lifetime appointment, although presumably if he wants to retire at some point, he can revice the old succession system. My guess is that even if he does not do so and dies in office, the Standing Comm could get it together to pick a successor. They look to me to be in better shape to do that than the Russians in dealing with Putin, who has no organized decisionmaking struture in place to do so in the way the Chinese do.

A.,

Russia used to run an empire and the Soviet Union was arguably that, with the other 14 republics becoming independent nations after the USSR broke up 30 years ago. Putin and many Russians clearly lust after regaining control over various of those former republics, alhough I do not see how that affects PRC particularly.

As for India, calling it "young" is pretty odd, although it is rising and clearly is and will be a regional rival of China.

2slugbaits said...

Barkley,

I meant that India has a very young demography with over half the population under age 25. China is a significantly older demographic.

The succession problem in Russia is troubling because it's a gangster operation and Putin really cannot tolerate any potential rivals. I agree that China's political system is more institutional, but Xi has also created a cult of personality, and that can be a problem when the personality dies. Xi has also grabbed a lot the key offices and titles as his own. The Communist party apparatus didn't prevent a power struggle after Mao died so I'm not convinced that the party will be able to prevent one after Xi dies. Xi is really the first leader since Mao who has build a cult of personality, so the fact that China has seen peaceful transfers since the 1980s may not mean much.

Anonymous said...

China's income may be 1.3 times our income but its population is 4X ours. China's per capita income is therefore only 1/3 ours. But yes its per capita income has been steadily rising which we all should celebrate.

Anonymous said...

"Xi has also created a cult of personality, and that can be a problem when the personality dies. Xi has also grabbed a lot the key offices and titles as his own."

Please explain this when possible. What is a "cult of personality" and how how President Xi created such a thing? Also, what "key offices and titles" has Xi "grabbed?"

This seems quite important, but I do not understand the meaning.

Thank you.

Anonymous said...

https://fred.stlouisfed.org/graph/?g=sCbZ

August 4, 2014

Real per capita Gross Domestic Product for China, United States, India, Japan and Germany, 1977-2019

(Percent change)

https://fred.stlouisfed.org/graph/?g=sCc3

August 4, 2014

Real per capita Gross Domestic Product for China, United States, India, Japan and Germany, 1977-2019

(Indexed to 1977)

Anonymous said...

"China had the succession issue under control with a pattern of having a leader in for two ten year terms, with the leader and the Standing Committee of the Politburo of the Central Committee of the CCP. Xi has blown that with essentially asserting a lifetime appointment..."

Presidential terms in China are 5 years. There is no term limit. The President is elected by the National Congress and President Xi has been elected to what will be another 5 year term.

Forgive me, but there was no "assertion" of a lifetime Presidential "appointment."

Anonymous said...

"China's income may be 1.3 times our income but its population is 4X ours. China's per capita income is therefore only 1/3 ours. But yes its per capita income has been steadily rising which we all should celebrate."

Also, the ending of severe poverty in China in 2020 has been a wonderful accomplishment that should serve as a model.

President Trump sought to contain China, and undermine and stop China's development. However, the Trump administration failed no matter the attempts and Chinese policy is meant to insure openness and increasingly advanced growth.

Anonymous said...

A prominent, highly respected economics professor at the University of California following The Economist wrote that President Xi would cost China from 10 to 50 years of development. There was no explanation in The Economist or by the economics professor. What I wanted to know, and still do, is "how?"

Anonymous said...

A question that troubles me, is whether there is a political consensus in America that a Cold War must again be waged.

rosserjb@jmu.edu said...

As I just posted on Angry Bear, I do not think there is a consensus, although there are clearly many people and interests pushing for it. I think Biden is trying to find some reasonable balance that takes a harder line than was taken under Obama reflecting changes that have happened (which include an increase in hostile actions towards neihbors ranging from India to Taiwan and in maritime zones), while maintaining cooperation on various issues of mutual intereste, one of those being climate as well as (hopefully) dealing with the pandemic, despite some complications on that one. I note that Biden's Chief of Staff dealt with pandemic issues under Obama, so that is a big focus of his.

Anonymous said...

...hostile actions towards neighbors...

Please explain precisely what hostile actions towards neighbors have been taken. Has there been hostile action taken towards India? I am unaware of any such action. Please help me understand.

Maritime zones? Would that be the South China Sea? I do not understand. After all, China belongs in the South China Sea and the US surely does not belong there.

Anonymous said...

I dearly appreciate the important response.

Anonymous said...

https://news.cgtn.com/news/2021-02-04/U-S-State-Department-says-one-China-policy-has-not-changed-XB7qG57DmU/index.html

February 4, 2021

U.S. State Department says 'one-China' policy has not changed

The U.S. State Department said on Wednesday its support of a "one-China" policy over China's Taiwan region has not changed, Reuters reported.

Asked if the United States still supported the policy, State Department Spokesman Ned Price said at a regular briefing: "Yes... our policy has not changed."