China’s rapid economic rise since 1980 is living representation of John F. Kennedy’s famous aphorism, “A rising tide lifts all boats.” Quite apart from lifting hundreds of millions of people out of poverty, China has spawned a thriving growth industry of academic and popular writing. Scarcely a month goes by without a new book “explaining” China’s ascent or attempting to predict its future, or its implications for the United States.
In this thicket of hackery, Arvind Subramanian’s new book, Eclipse: Living in the Shadow of China’s Economic Dominance, is a refreshingly clear-headed and well-argued new entrant. Subramanian is a senior fellow at the Peterson Institute for International Economics in Washington D.C., and unlike much contemporary writing on China, this is an unabashed data-based argument. Eclipse is a book worth reading because its core argument is one that will discomfit and even shock the American reader.
For a decade now, commentators have both debated whether China will replace the United States as the world’s most powerful country and attempted to date this moment of transition. Subramanian answers both issues at once, by arguing that China has already replaced the United States in terms of economic dominance. This is a surprising conclusion, but one that is backed up with quantitative detail. First, Subramanian claims that by an accurate GDP calculation, at purchasing power parity (PPP) terms, rather than at market exchange rates, China is quite possibly already a larger economy than the US. Secondly, he creates a new index of economic dominance, combining three indicators: GDP, share of world trade, and next creditor/debtor status. Using this index in historical perspective, he shows that the US had replaced Great Britain as the “most dominant” economy by the turn of the last century, rather than by World War II, and argues persuasively that his index, rather than more conventional metrics, fairly reflects the strength and influence of an economy.
Subramanian’s book has, unsurprisingly, elicited a polarized reaction. Writing in Foreign Affairs, Derek Scissors of the Heritage Foundation argued that Subramanian has exaggerated China’s strengths while overlooking its weaknesses. Scissors replays the most common American argument for skepticism on China: namely, that it will be an old country before it is a rich one. Subramanian concedes that China’s aging population will eventually inhibit its growth, but argues that the effects of this– one of the factors that crippled Japan, which was seen in the 1980s as America’s major rival– will not be felt until 2030. Most of Subramanian’s critics seize on China’s net creditor status as being of questionable relevance to its dominance: but this metric has a weight of only five percent in Subramanian’s index of economic dominance.
Subramanian has dubbed China “the inevitable superpower,” and in purely economic terms, his book successfully convinced me that this is the case. Yet there is a need for other scholars, presumably not economists, to consider what the nature of this dominance will be. Other than the Soviet Union, China will be the only economic superpower that is not a wealthy, or even middle-class, society. Even by Subramanian’s figures, the average American earns four times as much as the average Chinese- the difference between a rich country and one that is less than middle-income. This gap leads many Chinese policymakers to question why Europeans and Americans are so perturbed by stagnant growth. After all, while growth might have stagnated, it has done so at a level that strikes the rest of the world as fabulous prosperity.
The fact that China will be an impoverished superpower may well limit its ability to project power internationally. The Soviet Union attempted to match the US in terms of power projection, but this was eventually incompatible with the aspirations of its people for a better standard of living. China appears much more aware of this potential pitfall, and has thus been rather prudent and even cautious of deploying resources abroad without economic benefits. Unlike the US, China is also unlikely to develop a military arsenal of overpowering force and size. It is difficult if not impossible to envision a Chinese land army implementing regime change, at least in part for reasons of ideology, in a distant land.
Finally, China’s economic dominance will not manifest itself in cultural terms. This is in marked contrast to its predecessors, the United States and the United Kingdom. It is impossible, for instance, to understand the global phenomenon of Harry Potter without understanding the cultural impact of the British Empire. China has not had, and may never have, a Harry Potter or a Star Wars. An overwhelming economy without an overwhelming military, or a ubiquitous culture: China’s success will transform our understanding of what it means to be a superpower.