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US-China: Measuring decline and rise

18 Jan 2012 11:40

Dr Ken Henry and his team are busy preparing the Government's White Paper on 'Australia in the Asian Century', due to be released in the middle of this year.

In Australian academic, business and media circles there is breathless excitement about the rise of China (and the US decline they assume as its inevitable corollary). But one of the points I would make to the White Paper team is that it would be a major error to write out the US (as the White Paper's title seems to imply), and that we may yet prove to be living in the Asia Pacific century, or indeed the Indo-Pacific century.

COMMENTS

27 Jan 2012 09:34

Andrew Shearer's recent post on US-China comparisons prompted me to take a look at the paper by Michael Beckley he recommended. While I don't have anything useful to contribute on the specific subject of the US military/security edge over China, a couple of things did strike me.

First, I would summarise many of Beckley's points regarding the clear superiority of the US in measures of innovative capacity such as R&D spending and patent citations as reflecting the big difference in GDP per capita between the two countries. Given the close correlation between the level of a country's development and many of these variables, these results are exactly what we should expect when comparing a developed and developing economy. 

Or, to put it another way, countries at the economic frontier are likely to grow more through innovation while countries involved in catch-up growth will rely on a different growth model. 

COMMENTS

3 Feb 2012 09:33

Michael Beckley is an International Security Program Research Fellow at Harvard Kennedy School's Belfer Center.

Is the US in relative economic decline to China? In a recent article in International Security, I say 'no'. In a post on this blog, Mark Thirlwell says 'yes'. Who's right? 

The answer is: we both are, but only by our own definitions of decline. I define decline as a narrowing of the wealth gap between the US and China. Thirlwell defines decline in terms of economic growth rates. Thirlwell and I come to opposing conclusions because the US is growing at a slower rate than China while simultaneously becoming wealthier. 

How can this be? Normally, growth rates dovetail with changes in wealth gaps. But these measures often diverge when comparing a rich country like the US to a poor one like China. 

COMMENTS

6 Feb 2012 15:29

As Michael Beckley acknowledges in his reply to Mark Thirlwell, it is hard to say definitively whether America is declining economically relative to China, because it depends what you measure. On some measures it is, and on others it's not. So the next question is: which measures should we pay attention to? And that depends on why we are interested.

In the present debate, flowing from Michael's excellent essay in International Security, we are interested in what the economic trends mean for America's strategic and political power, particularly in relation to China. And we are interested in that primarily because of the implications of shifts in relative power for America's management of its relationship with China. 

COMMENTS

7 Feb 2012 15:30

This passage in Hugh's latest post sparked two questions in my mind:

There are three key asymmetries in the US-China relationship which all break China's way. China's objectives are focused in Asia, while America's are globally dispersed.

  1. Isn't it the case that one asymmetry in the US-China relationship that has long broken in favour of the US is America's system of alliances and security partners in Asia, which helps support its primacy? If China is a 'lonely superpower', the US is a very popular one in Asia and growing more popular.
  2. Aren't China's strategic objectives growing more dispersed geographically as its power, energy imports, etc expand? If so, could this asymmetry also be breaking the way of the US?

Photo by Flickr user Beverly & Pack.

COMMENTS

8 Feb 2012 11:11

Robert Ayson is Director of Centre for Strategic Studies at Victoria University, Wellington. 

The recent Interpreter debate over the relative power of China and the US is important in its ambition but questionable in some of its method. The problem is the assumption that we can decide whether the US really is in relative decline on the basis of an economic comparison with a growing China, and on then finding some way of determining how that material power makes for influence.

Even if we were to agree on the same metric for measuring that economic power, we would still have a variable where each unit of power is equal. But power is about relationships (what I can do to you?; what do you think I can do to you?; what do others think I can do to you and to them?). It is not about comparisons (am I bigger than you?; do you think I am bigger than you?; do others think I am bigger than you?). We are doing too much of the latter sort of analysis.

COMMENTS

9 Feb 2012 14:04

Malcolm Cook responds to my argument that US-China strategic competition is weighted China's way with two counter-examples. First, doesn't the US have a big advantage in its network of allies in Asia? And second, doesn't China now have global interests just as America does, so it too must spread its strategic efforts globally, rather than reap the advantage of being able to concentrate them in Asia, as I had suggested? Both goods points, but alas, I do not think either make much difference.

First, whether its allies are an asset or a liability for the US against China depends on how closely US objectives align with their allies' objectives. I think the alignment is much weaker than it often appears. 

COMMENTS

10 Feb 2012 15:28

Rob Ayson's characteristically wise and subtle post makes the very important point that what matters about power is not what you've got, but what you choose to do with it; human choices like that are subjective things, and hence hard to plot on graphs, let alone predict. 

As Rob hints, choices about power are especially hard to plot or predict because power is, to use a word he taught me to apply in this context, transactional: your choices about the exercise of power towards me profoundly influence my choices about the exercise of power towards you, and vice-versa. Absolutely right.

So, two modest points in response, the first just by way of elaboration. A key element of Rob's argument is that one of the biggest subjectivities in strategic choices is in perceptions about respective power. What will drive the strategic choices about one another in Beijing and Washington over the next few years is not the reality of their relative power – whatever that might turn out to be — but the perceptions of it in each place.

COMMENTS

15 Feb 2012 08:25

I'm sympathetic to the distinction Michael Beckley raises between GDP and GDP per capita in his post on defining decline; it's a point I also focused on in my original post. Each gives us different readings about national capabilities.

But the other question I raised concerned comparisons over time. Specifically, I was surprised by Beckley's contention that the economic gap between the US and China had grown since 1991, and I plotted some GDP and GDP per capita data to suggest that the gap looked like it had shrunk. Beckley disagrees and the source of this difference is that, while I focus on ratios, including the ratio of GDP per capita, Beckley looks at the absolute difference in GDP per capita between the two economies.

It certainly makes sense to look at the absolute difference when comparing the two economies at a given point in time. But absolute differences do not do a good job of capturing changes over time. That's why we should normalise the data when making these kinds of comparisons – for example by constructing ratios or indices.

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