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Sunday 20 Aug 2017 | 14:02 | SYDNEY
Sunday 20 Aug 2017 | 14:02 | SYDNEY

The Economist lays it on the line



11 January 2011 16:57

The Economist's Free Exchange blog has a handy table showing you when China's GDP will overtake America's. You can manipulate it by changing the projected growth figures, though under any reasonable assumption, China will become the world's largest economy in the next 8-12 years.

Dropping to second won't in itself hurt the US — it's not a zero-sum game and Americans, individually, will continue to be much wealthier than Chinese. But how to manage the transition from one global leader to the next'

Exactly once in the history of the industrialised world has a dominant great power lost its status to another dominant great power, and that already tiny sample size is of limited use in informing us about the future. Britain and America shared a language, a culture, and a general political philosophy of liberalism and democracy. They were explicit friends and allies. Perhaps most important, they were both rich, in per capita terms. Chinese culture is alien to Americans, and its primary political values appear to be quite different from those of the world's current hegemon. The two countries are not enemies, but their relationship is explicitly adversarial. And while America is rich, hundreds of millions of Chinese citizens will remain extremely poor at the time China assumes the top spot in the GDP league tables.

The Economist has written on the challenges likely to accompany this looming handover, but I think it's easy to underestimate just how unprecedented and historic a peaceful transition would be. The natural urge is to advise both countries to plan ahead, so as to make the process as easy as possible. But there is little in the way of past experience to suggest what the best approach ought to be. I'd generally recommend that America invest time and energy in building international institutions. But Americans are likely to view this as a preemptive relinquishing of power, and the Chinese may rightly see it as an attempt to tie their hands. Every step is fraught. One can only hope that the two nations perceive the clear mutual benefits of a cooperative relationship. But the clear gains from peace and trade did not prevent a breakdown in the international order in 1914.

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