Will China replace the USA as the worlds "biggest" superpower.

Do you guys think that China will eventually replace the USA and essentially have the power the USA currently holds (not just economically but perhaps militarily as well).

 

Definitely.

 

It will be at least 30 years before any country can challenge us economically or militarily: mano e mano. If both of our economies continue at the same rate, China's total economy could be larger than ours, but American per capita income would be four times greater.

Measuring strictly by official exchange rates, China ranks as the fourth largest economy in the world. It has a per capita income of over $1,700, about one-twenty-fifth (1/25) that of the U.S. Furthermore more, China's military technology is so far behind the U.S. (and a lot of other countries) that they cannot yet be considered even a mild threat. More importantly, however, America still holds an advantage in the "soft" (meaning not military) power resources like Hollywood and the world-class universities. Consider this statistic: China's research and development is 10% that of the American level, meaning that in this arena, the U.S. will be progressing at a much faster rate than China.

Possibly most telling of all is the fact that China is our third largest trade partner and second largest official creditor. Your could argue that this has made us vulnerable, for China could dump all of its holdings to the dollar and hurt us, and while it is true this would damage our economy, it would cripple theirs.
The yuan accounts for only a third of the increase in America's trade deficit over the past five years (translate: their not as important as everyone thinks they are).

In regards to jobs and standard of living, China still has 400 million people in poverty (less than $2 per day). China (and India) has extremely large social stratification (inequality), a migrant work force of 140 million, severe pollution, rampant corruption, and government censorship (remember, they're Communists) indicating that their political progress has failed to match their economic evolution. Will Hutton from the Work Foundation, had this to say, "China's growth has been constructed around an alarming expansion of systematic inequality." He predicted that rising instability and demands for political reform could derail China's bid for superpower-dom...Communist China's decade-long development is something of a miracle, but the moment is rapidly approaching when China must break out of the straitjacket of top-down control if it is to maintain economic momentum."

Arguably the most important notion is that the U.S. has much more leverage on China because of their dependence on U.S. trade and investment. If the U.S. were to impose an embargo (for ****s and giggles here) on China, we would still be able to import low-level goods from other countries such as Thailand, Taiwan, Indonesia, Malaysia, etc. or we could adopt mercantilist policies and produce these goods domestically. The U.S. has invested way more in China in the last quarter century than any other country ($51 billion in 2005 alone), investments that have lifted some 280 million Chinese out of poverty.

It is because of this, that the I do not see the U.S. being overtaken by China anywhere in the near future.

 

The U.S. has a high per-capita, with lots of buying power while China has a lot per-capita - subsequent cheap labor - and lots of selling power. The United States is loosing valuable labor jobs to China while China is selling everything we used to make right back to us.

The economies of both nations depend on one another to survive which rules out any sort of hostility between China and the U.S. Ultimately, China's economy will continue to grow exponentially, in my estimation, and rival the U.S., but the American economy has much more leverage over foreign markets and the U.S. dollar is still much stronger. Not only that, the U.S. economy is more reliable and therefore more international investments are trusted in the U.S., unlike Chinas.

 

This is a great topic, and very important as well.

China is interesting to watch because it's experimenting to free up a market in a totalitarian state. A trade war between China and the US would hurt the US but devestate China.

 

While I agree with the your overarching opinion, that the USA is going to stay on top for a while, I believe the USA is definitely not as "strong" as it used to be and I must admit that I'm a bit skeptical about the future. Japan and China literally support our national debt (through Treasuries) and so they are gaining a lot more power that allows them negotiate terms that favor them. Additionally, because the USA is in quite a deficit countries like China will begin to not take the dollar as easily as they have done in the past.

 

What makes you skeptical about the future? Our national economy is great.

-- the U.S. economy is now in its fifth year of solid economic expansion. Almost any country in the world would gladly trade its economic conditions for a U.S. economy.

-- In Canada, it was headline news in June that the unemployment rate fell to a 32-year low of 6.1 percent. In more than a decade, the United States has not had an unemployment rate higher than 6 percent except for five months in 2003, and our media disparagingly dismissed that period as a "jobless recovery."

-- Nine states have set record-low unemployment rates so far in 2006, and an additional 15 states are within a percent of their historical low jobless rates.

-- Almost half of all states are at or near their lowest jobless rates in history

-- we have a national unemployment rate of 4.6 percent, almost any country in Europe would love to have our labor market conditions.

-- It's been more than a quarter-century since France or Germany has had unemployment rates anywhere close to 4.6 percent, and 30 years since the European Union countries as a group have had a jobless rate that low.

-- If the European Union were a U.S. state, its current overall unemployment rate of 7.5 percent would rank it the highest in the United States except for Mississippi.

-- more than 5.2 million U.S. jobs that have been created in the past two years, a pace that adds more than 142,000 jobs every month

-- phenomenal 5.2 percent growth in real U.S. output so far this year, which is double the growth rate of most European countries

And what about the dire warnings of the "2003 tax cuts for the rich" that the media trumpeted so loudly several years ago?

Where are the reports today about the explosion in tax revenues generated by the strongest economy in a decade, and the increasing share of taxes paid by "the rich?"

-- In the first eight months of the current fiscal year, federal tax receipts have increased by 13 percent, the second-highest rate of growth for that eight-month period in the last 25 years, surpassed only by last year's increase of 15 percent.

Further, the share of taxes paid by the wealthiest 10 percent has increased in each year since the 2003 tax cut, rising from less than 50 percent of all income taxes paid in 2003 to almost 60 percent in 2005.

In other words, the media spin about "tax cuts for the rich" never materialized - tax revenues have increased significantly and the rich are paying more in taxes. Where are the news stories now about the "tax hike for the rich"?

Even in its worst recession, the U.S. economy is still stronger than almost any other country in the world during its best years.

And yet, even now, when the U.S. economy has a historically high level of employment, historically low unemployment rates in nine states and higher national income, output and tax revenues than at any time in U.S. history, the economy still gets no respect. Why?

I disagree. Read the last paragraph of my first post.

 

I am not as optimistic because if China's economy is to continue its current trend (about 8% real GDP growth since 1997) it will put a lot of weight on the world as a whole particularly in terms of energy consumption. All the pollution coming from China will literally render the environment useless if we do nothing to solve this great problem. This alone makes me a skeptic and it’s not because China could end up replacing the USA but because there will be no USA to replace--in terms of the environment I think places like China are especially dangerous because there are virtually no regulations in place.

I did read all your posts but I still think that in the past we almost dictated everything to China and now it is really starting to be more of a negotiation.

In the end, I do see China as a big potential threat to the USA not because the USA itself is not doing relatively well but because China is growing so fast that things could easily get out of hand--creating problems faster than we can solve them.

 

I understand your environmental concerns. One note though, I'm not sure how much economic background you have (this is not an insult) and if you do have an economic background then you already know this, but too much GDP growth too fast can cause serious problems.

You can't forget though, right now the American per capita income is 25 times higher than China's. China has four million people in poverty. They can never be a superpower until they deal with these domestic issues.

Fair point. I still see India as a bigger threat than China, however.

I'm not dismissing them as a threat. They could be one but they certainly do not control our economy. They need us more than we need them.

 

No offense taken... I understand China could face many future problems and that is why I stated things might get complicated especially because it is such a big player--any problems or flourishing of its economy will have a world wide effect.

While I can see why you are optimistic I am more interested in your reasoning as to why you see India as a bigger threat.

 

first of all, i agree with lots of your notions, but i would only say that china will not take over US in the next five or ten years. in this world, you can't really predict what happens in the long run. maybe a war will break out, or something like that. and also, a strength of a country is not just economic, but also other elements. so don't solely use economic elements in the arguements.

 

It's complicated but I'll try to keep it to a readable size.

Since India began to open up its markets through economic reforms and reduced government controls on foreign trade and investment. Foreign exchange reserves have risen from US$5.8 billion in March 1991 to US$177 billion in January 2007, while federal and state budget deficits have reduced. Privatization of publicly-owned companies and the opening of certain sectors to private and foreign participation has continued to benefit their economy.

America's software and service industries, strong drivers of US economic growth for nearly two decades, are showing signs of emulating the struggles of the US steel and semiconductor industries. India's booming software industry, which is increasingly doing work for US companies, could surpass America in software and tech-service jobs by 2010, driven by cheap labor costs and strong incentives for new financial investment.

India has a diverse economy, with a GDP growth rate of 9.2% in 2006, and it has capitalized on its large pool of educated, English-speaking people to become an important outsourcing destination for multinational corporations.

According to Jeremy Siegel, the Mumbai Stock Exchange's Index of 30 blue chip companies has more than tripled in the last 2½ years, far outpacing the China's stock returns. And although China's stupendous economic growth rate still surpasses India's, India has now reached the 6% plus rate of GDP growth that marks the emergence of a developing country.

In addition, the sudden interest in India has boosted the country's self-confidence. Grant Thornton, a leading international audit and consulting firm, carries out a survey of business confidence of more than 7000 owners of medium-sized businesses from 30 countries. Surprisingly, India ranks number one, ahead of the G8 economies, China, and Europe's "Celtic Tiger," Ireland.

India lags China in the hard infrastructure of roads, airports, and real estate, but it leads in the "soft" infrastructure of democratic institutions, free press, and an independent judiciary.

Lastly, India has the edge over China in the banking, business relationship, and demographic sectors.

 

I blame Dell! everytime I dial for tech support i get the result of outsourcing: Jake with a heavy accent asking me what i need today.

 

You economists have not mentioned that China will soon have one of the oldest populations in the world. They have a huge problem in this area coming up, while the US and other countries also have an aging population, we will actually not be nearly as hit due to immigration projections.

 

I think India is a bigger threat because China has no reason to attack us.
If they were to do so it would only destroy their economy and there world power.
So in the long run I think China is scared of us.
India on the other hand has no reason to be scared.
They have progressed alot faster then China following technology.
And both countries have about the same population.
They would be equally difficult to win a war with, and if eathier were to attack us plenty would lose their lives for an unjust cause~