by JOSEPH S. NYE
The assumption that China will overtake the United States as the world’s most powerful country is a mistake
The 21st century is witnessing Asia’s return to what might be considered its historical proportions of the world’s population and economy. In 1800, Asia represented more than half of global population and output. By 1900, it represented only 20 percent of world output – not because something bad happened in Asia, but rather because the Industrial Revolution had transformed Europe and North America into the world’s workshop.
Asia’s recovery began with Japan, then moved to South Korea and on to Southeast Asia, beginning with Singapore and Malaysia. Now the recovery is focused on China and increasingly involves India, lifting hundreds of millions of people out of poverty in the process.
This change, however, is also creating anxieties about shifting power relations among states. In 2010, China passed Japan to become the world’s second-largest economy. Indeed, the investment bank Goldman Sachs expects the Chinese economy’s total size to surpass that of the United States by 2027.
But, even if overall Chinese GDP reaches parity with that of the United States in the 2020s, the two economies will not be equal in composition. China would still have a vast underdeveloped countryside. Assuming 6 percent Chinese GDP growth and only 2 percent U.S. growth after 2030, China would not equal the United States in terms of per capita income – a better measure of an economy’s sophistication – until sometime near the second half of the century.
Moreover, linear projections of economic growth trends are misleading. Emerging countries tend to benefit from imported technologies in the early stages of economic takeoff, but their growth rates generally slow as they reach higher levels of development. And the Chinese economy faces serious obstacles to sustainable rapid growth, owing to inefficient state-owned enterprises, growing inequality, massive internal migration, an inadequate social safety net, corruption and inadequate institutions, all of which could foster political instability.
China’s north and east have outpaced its south and west. Almost alone among developing countries, China is aging extraordinarily fast. By 2030, China will have more elderly dependents than children. Some Chinese demographers worry that the country will get old before getting rich.
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