China, the Poor Empire

The day is drawing near when China’s economy will outpace America’s. However, even then, the U.S. will not stop being the dominant world power.

What changes will take place when China is the country with the largest economy in the world? We will experience that firsthand very soon. A couple of weeks ago, the International Monetary Fund published a report suggesting that China will overtake the United States. A large group of economists rejected that claim, because of the calculation of the yuan in relation to the dollar. But even a strict adherence to the realistic exchange rates does not significantly delay the inevitable, when China will be number one. The Economist believes that this will happen in 2019.

The Poor Society

The conquering of the No. 1 spot by China will redefine the concept of a superpower. During the past 100 years, the world has grown accustomed to assume that the biggest economy also holds the title of richest nation in the world. With the rise of China and its ascendancy to the status of economic superpower, gone is the union between the wealth of a nation and the individual. China is simultaneously richer and poorer than the western world. China’s foreign reserves amount to more than $3 billion. However, given the exchange rates, an average American is still 10 times richer than the average Chinese citizen. The wealth of American society is only one of the reasons why China will not become the biggest superpower on the day that their economy outpaces America. The world has grown accustomed to seeing the U.S. as the only superpower. This alone raises the chances of America’s continued political dominance, even when it will not be backed up economically.

The American army has advanced to a level unreachable by the Chinese. The U.S. is superior in terms of “soft power.” Beijing currently does not have any equivalents to Hollywood and Silicon Valley. And finally, the Chinese have not created anything resembling the concept of the “American dream.” Even though political and economic dominance are not inseparable, they usually go hand in hand. A Brazilian diplomat was recently quoted as saying outright that China, being Brazil’s biggest trading partner, is more important to the country than the United States. The first visit by the new Brazilian president, Dilma Rousseff, was in Beijing, not Washington. Trade and investments have increased Beijing’s clout in Africa and the Middle East.

The Looming Crisis

Japan, South Korea and Australia are quickly realizing that their economic interests are in conflict with those of China. These countries are economically tied to Beijing, but their main military partner is the U.S. If China continues acting without restraint, as they have done in the last year, these Asian countries might tighten their ties with Uncle Sam. In Asia, there is an ongoing debate about the expanding influence of China. Kishore Mahbubani, the former foreign minister of Singapore, said that Asians know that China will still be in place 1,000 years from now, but they cannot be sure if the U.S. will still be there after 100. China’s dominance, combined with the rising deficits in the U.S., EU and Japan, has challenged the Western view of the relationship between democracy and economic prosperity. From the 19th century, when the U.S. surpassed Great Britain, the country with the largest economy was a democracy. If China maintains its one party model in subsequent decades, that relationship will change. The bold Western idea that “freedom works” will be replaced with a fashion for more authoritarian models of governance.

At some point, however, China too might have to face a crisis. Their economic system and government will have to change. Their growth of GDP, ranging between 8 and 10 percent annually, is simply unsustainable. China also faces a potential demographic and environmental crisis. Authoritarianism is becoming much more anachronistic, as the reaction of the Communist Party towards the Arab Spring indicates. However, a democratic regime in China would threaten the unity of the country, due to the nationalist movements of the Uighurs and Tibetans. When China plunges into an economic and political crisis, the West will rapidly change their assessment about the country. Some will say that the Chinese miracle of the past 30 years was but a mirage. However, this is not true. The debate about China has needlessly created two polarized groups. One camp is convinced that China is the future lone superpower. Others contend that China is an internally unstable country and faces a looming economic and political crisis. In reality, both sides are true. China will be a strange superpower.