Power Player of the Week

Yesterday’s The Independent newspaper leads with a headline screaming: “America Meets the New Superpower.” The accompanying article describes this week’s visit by President Hu Jintao in the context of China’s ferocious economic growth. It suggests that the US will inevitably need to prepare for a “managed decline” similar to the UK's in the post-WW II period, as we face this rising superpower.

Should America start preparing for a day when China has the world's leading economy and ours is on a relative "decline"? First, let’s put things in perspective. China's GDP is less than half of ours today. China’s annual growth is twice, maybe three times as high, but by another important measure, per capita income, China has a long way to go. Chinese per capita income is around $6300 per annum, while in the US it will top $40,000 this year. Per capita income measures not just the size, but the success of an economy and it will take many years of 9% growth for China to reach US levels.

Furthermore, the US is not standing still. This economy grows consistently at rates between three and four percent. Apply such growth figures to the American Gross Domestic Product and it is clear that on an annual basis, the US creates levels of wealth that far outstrip China's, and will for many, many years. (One only wonders what US growth rates would be if we had 15% public sector consumption of the economy and a 15% flat tax.)

The article is consistent with an argument often heard in the UK and Europe which goes like this: “We had the 19th century, you Americans were the dominant force in the 20th century, but the 21st century will belong to (fill in the blank).”

The “blank” varies. During the 1980’s it was Japan. During the early part of the 1990’s it was the “emerging European superpower.” And now it is China, or India, or maybe next week China again. Whoever it is, according to people like various professors I had at London Business School, it will certainly not be the United States. The winners may vary, but the loser is always the United States.

The thing that makes this all so labored is the basic assumption that Americans will be shocked, disappointed, depressed or otherwise put off by their loss of preeminence on the world economic stage. But I don’t find that particularly convincing. In general, Americans are unlike, say, Japanese who often say things like, “USA number one, Japan number two… we are the little brother!”

Rather, in our oft noted provincialism, we are generally so engrossed in our own lives that we leave the international ranking game to others. If a rising China helps us buy more cheap stuff at Wal-Mart, drive better cars, or surf better computers, I think most Americans will say “right on!”

Granted, we should be concerned about the peaceful rise of the next global superpower and I hope that a grand strategy will emerge that focuses on making China a responsible global player. But the European assumption that Americans will fight the rise of China before ceding our dominant role on the world stage is more a function of their own particular political history than our own.

Which is another good reason to be glad that with each passing year, the European continent is less influential in global power politics.