The Pandemic Depression
The Global Economy Will Never Be the Same
In Eric X. Lee's telling (The End of Globalism, December 9), the sovereign nation-state will soon regain its status as the primary unit of global governance. The United States is in decline and globalism, a strange 25-year aberration, is ending. China's rise could lead to a classic Thucydides Trap, a situation in which a hegemonic power fails to make way for a rising challenger and conflict ensues. The United States should recognize that the age of its empire is over and consolidate its status as one among many major powers in the world.
This analysis of the global order is commonplace in contemporary international relations theory. It is also wrong. To see why, just look at the last so-called Thucydides Trap, when the United Kingdom did not make room for a rising Germany. Germany's GDP surpassed Britain's around 1908, making it the heir presumptive to global hegemony and setting the stage for World War I. Britain did not accommodate Germany's desire for a place in the sun, and war ensued.
The story is compelling except for one small detail: by 1908, the U.S. economy was already larger than those of Germany and the United Kingdom combined. By 1920, it was roughly the size of Britain, Germany, France, and Italy put together. World War I was not a war for global dominance. It was a war for regional hegemony over Europe, the poorer, secondary core of the global economy. Even if Germany had won, it would still have been dwarfed by the United States.
In 2009, China overtook Japan to become the largest economy in East Asia and the second-largest in the world. It does not look set to overtake the American economy. In late 2015, after all, China's growth slowed to a trickle as its economy converged with those of other poorly-governed middle-income countries such as Brazil and Russia. Today, all of China's growth is coming from government deficit spending. That can't last forever.
China claims that its GDP grew exactly 6.7 percent in each of the first three quarters of this year came just after Beijing fired the head of its National Bureau of Statistics in January, seemingly for reporting unsatisfactory growth rates. China's new chief statistician is also the vice chairman of National Development and Reform Commission, the organization responsible for setting China's GDP growth targets.
According to the more trustworthy IMF estimates, China's GDP per capita today is just $8,261, or less than 15 percent of the U.S. level of $57,294. Any forecast of future Chinese parity with the United States depends on heroic estimates of China's continued GDP growth. They also depend on China retaining a much bigger population than the United States. But by the end of the century, China will be a much smaller country than it is today.
Due to low fertility, consistent elite emigration, and a sex ratio of 115 newborn boys for every 100 newborn girls, China's population at century's end could be as low as 600 million. Compare that with standard estimates for the United States of 450 million, and it becomes clear that China's huge demographic advantage is rapidly dwindling. China's large population will no longer compensate for mediocre GDP per capita.
China is not going to overtake the United States in this century. It may, however, overtake Europe. Similar to China, Europe has a stagnant population and faces massive brain drain to the United States. It also poorer, on average, than the United States and is growing more slowly. Like in the early 1900s, the great challenge of the late 2000s may be that China will overtake Europe for second place in the global economy. If it does, it will still be far behind America.