America’s global primacy will remain unaffected by China’s rise over the last four decades. China’s recent military celebration of the 70th anniversary of communist rule will not change that, despite the fears of ‘declinists’ that the US can no longer protect its allies and that it is no longer the primary power in Asia.
The ‘declinists’ are wrong. Historically, military and economic power have defined great power. What are the markers of America’s superpower and so-called decline – and the hallmarks of China’s growing influence?
When World War II ended in 1945 the US was the most powerful economic and military power. It then accounted for 50 per cent of the world’s GDP. The US dollar replaced the British pound as the world’s top currency. And America’s monopoly of nuclear weapons ensured its unchallengeable global clout.
The US used its varied strengths to create several international institutions including the United Nations, the North Atlantic Treaty Alliance, the International Monetary Fund and the World Bank. It helped to rebuild the war-shattered economies of defeated enemies like West Germany and Japan – and of West Europe generally.
It also created a network of military alliances that still exist. For people in many countries the US became the standard-bearer of liberal democracy. And there is no question about the worldwide appeal of its“soft power” – from ideas to Coca Cola to blue jeans, information technology and pop music. They spring from its diverse and democratic society.
What is China’s rise about?
China’s rise owes much to its economic prowess over the last 40 years The most visible instrument of that progress is its strategically significant Belt and Road Initiative (BRI) which has spread across more than 65 countries in Asia, Europe, Africa and Latin America since 2013. China’s $ 15 trillion economy is second in size only to that of America’s $ 21 trillion one. It is far ahead of Russia’s $ 1.5 trillion or India’s $ 3 trillion economies.
But China’s defense spending is considerably less than that of the US. In 2018, the US spent $649 billion on its military, China $250 billion. Especially in the face of economic slowdown, China’s defense expenditure is unlikely to match that of the US in the foreseeable future. Meanwhile the US is already set to increase its military spending over the next two years.
China has also created economic institutions including the Asian Infrastructure Investment Bank (AIIB), which it presents as a complement to the American-sponsored World Bank and International Monetary Fund. That developing Asian and African countries and emerging Russia should want more investment finance is understandable. Yet one of the most outstanding points about the AIIB is that most of America’s European allies have joined it. After a decade of economic decline several member-states of the European Union (EU) want more cash for investment.
Meanwhile, a case has been made that America’s rise continues. In the most recent quarter, America’s economy grew at 4.1 per cent – well above its 3.22 per cent long-term rate. Trump’s “America First” policies have created jobs, brought companies back to the US from abroad and upgraded domestic supply networks. Trump’s restructuring of the US economy will make it more competitive and help to maintain America’s ‘great power’.
In contrast, the Chinese institutions and policies that support a domestic consumer economy are weak. Most bank lending is to the state sector rather than to the consumer sector. And that could stall China’s ascent and thwart its ambition to overtake the US.
At another level, some say that the economic decline of the US is evident from its position as the world’s largest borrower. From China. Others, more optimistic about America’s economic future, disagree that it has put itself at risk by becoming indebted to China. They point out that China held 9.1 per cent or $1.3 trillion of US debt in 2011. That decreased to 5 per cent in 2018.
More importantly, some 70 percent of US debt is held by American domestic financial actors and institutions. And it is Japan, America’s strongest Asian ally, that has sometimes been the largest foreign holder of America’s debt. This was evident as recently as in June 2019.
Is China rising economically in Asia at America’s expense?
In 2011, President Obama’s “pivot to Asia” shifted America’s focus from the Middle East and Europe to Southeast Asia. In this region, many of China’s neighboring countries are threatened by its territorial ambitions as defined by the “nine-dash-line” which shows that it claims 90 per cent of the South China Sea. The US Navy does carry out freedom of navigation operations (FONOPS) to check China’s expansion in the South China Sea. Given its superior military power – and its long experience in using FONOPS to check the maritime claims of many countries the US is unlikely to bow to any military pressure from China.
However, the awkward fact is that eight years later after the US ‘rebalanced’ to the Asia-Pacific, China has increased its economic influence in the area. China claims that its total volume of trade with the Association of Southeast Asian Nations (ASEAN) hit a record high of more than USD 587.87 billion in 2018. In the same year, US trade with ASEAN was $272.0 billion in total (two way) goods trade.
The tough question is whether ASEAN countries could be drawn into China’s economic – and political – orbit because of its financial strength. The US has yet to work out and announce a coherent policy to counter the BRI.
The intertwining of economics and military competition
Meanwhile, a change in Washington’s stance on China’s world position has become noticeable. Washington was once keen to bring China into the global economic system. The Clinton, Bush and Obama administrations highlighted US -China cooperation on climate change and other global issues. However, between 2015 and 2017 the Obama and Trump administrations alleged that China was stealing US intellectual property and trade secrets. In 2015, Obama warned China against using its military might to intimidate others. Significantly, it was the Trump administration that first highlighted the strategic implications of Chinese advances in artificial intelligence.
Moreover, Trump’s National Security Strategy 2017 drew global attention to China’s expanding strategic importance worldwide. Since then, the US Defense Department has reported that Beijing is intent on developing a world-class military and becoming the preeminent power in the Indo-Pacific region.
On the whole, though, neither Obama nor Trump has had any well thought out strategy for dealing with China’s military moves in the South China Sea since 2012. Does this spell America’s ‘decline’ in the Asia-Pacific? Or merely its own trading interests? For instance, only 14 per cent of America’s maritime trade passed through the Sea in 2016 – compared to over 64 percent of China, and nearly 42 per cent of Japan.
Alternatively, does Trump’s apparent inability or reluctance to confront China in Southeast Asia stem from his emphasis on blunting China’s technological prowess? After all, his trade war challenges China’s economic advance. Technology is the currency of power in his trade war – which is part of his security strategy. A show of military force would not thwart China’s economic advance.
Additionally, Washington’s seeming tardiness in Southeast Asia is offset by China’s economic slowdown over the last decade – long before Trump declared his trade war. His trade offensive has weighed China’s economy down with unprecedented problems and led many foreign companies to quit China and to invest in other countries. So even if the China-backed Regional Economic Comprehensive Agreement (RCEP) is signed by the end of this year, an economically burdened China will find it hard to establish itself as the first among equals.
At another level, while Trump’s decision to withdraw the US from the Trans-Pacific Partnership gives the impression of America’s “decline”, China’s record of bad trading practices reduces the chances of its replacing the US as the world’s economic standard-bearer. China’s partners in RCEP will guard against its high-handed behavior. Some of those partners – including Japan, Australia and New Zealand – are economically strong countries and America’s allies.
Conclusion
Since 1945 the global economic and military power of the US has been a fait accompli. Most American troops outside the US are in Asia. In contrast, it is too early to predict whether China will achieve its ambition of creating globally deployable armed forces by the mid-21st century.
China’s economic ascent will continue – although not at the breakneck speed of the last 40 years. But it is inconceivable that that America’s progress will stop or slow down to a point where China surges ahead of the US and becomes the world’s primary power.
More figures prove the point. In 2018 the GDP of the US was worth USD 20 billion. Its GDP per capita was more than USD 55, 000, when adjusted by purchasing power parity (PPP). China’s GDP per capita was last recorded at just over USD 7,000 in 2018. When adjusted by PPP it amounted to a little more than USD 16,000.
All told, the US retains a considerable advantage over China in capabilities and power. Economics and strategy are intertwined. China’s ascent will not be synonymous with America’s decline. America’s superpower looks set to endure on the international horizon.
