In This Review

Eclipse: Living in the Shadow of China's Economic Dominance
Eclipse: Living in the Shadow of China's Economic Dominance
By Arvind Subramanian
Institute of International Economics, 2011, 232 pp

Subramanian, an economist, argues that if China grows at roughly the same rate as other countries that managed to narrow the gap with richer competitors in the past, and if China’s foreign trade increases at the rate some theories predict for countries of its economic size, then China will soon become the world’s largest economy and its currency will become an international reserve currency. Those are two big ifs, but the author does not seem particularly concerned with establishing their likelihood. He is more interested in applying formulas derived from economic history to quantify the size and fix the date of the economic power transition that will happen -- as soon as this decade, he says -- if current trends continue. Words such as “eclipse,” “shadow,” and “dominance” lend a bracing urgency to that prediction, as do some nightmare scenarios scattered throughout the discussion. Yet such rhetoric contradicts the non-zero-sum principles of economics, as well as Subramanian’s own advice that the United States should continue to cooperate with China. It remains unclear how the growth of China’s prosperity and the convertibility of its currency -- both longtime U.S. policy goals -- will threaten American interests.