Noah Smith argues that China’s a bigger economic power than the United States. In Purchasing Power Parity (PPP) terms, which Smith does a nice job of explaining, China’s Gross Domestic Product (GDP) is already likely higher than that of the United States. And, at comparative growth rates that don’t seem unreasonable given macroeconomic conditions, China’s economy may be double that of the United States’ within about twenty years
I think Smith is a bit too glib about siding with PPP against nominal measurements of GDP. But he’s correct that the trends, energy, and political momentum look very good for China right now. I also tend to agree with him that analysts who see America’s military advantage as ‘locked in’ are making some pretty big wagers. I get particularly frustrated with those who fall back on American innovation as a “magic bullet” that will maintain US primacy. Yes, China has an innovation problem, but a country with a billion people does not need to be as innovative as a country with 325 million to stay competitive. Plus, the Chinese are making large investments in higher eduction and human capital, while the US seems intent on eviscerating one of the few sectors where it remains a world leader.
There are a number of reasons for skepticism about linear projections when it comes to China. The country faces a potential time bomb when it comes to domestic lending and debt. As noted above, it does suffer from a major innovation gap; the list of challenges is long.
At the same time, people who focus on China’s challenges tend to make overly optimistic assumptions about the United States. There’s no question that our political economy is a mess, with one of our major parties intent on a ‘scorched earth’ approach to governance when it’s out of power, and apparently barely capable of governing when it’s in power. That might not be a terrible thing. After all, the GOP’s economic policies are largely the opposite of what the United States needs, such as, on the one hand, relentless, deficit busting, tax cuts and, on the other hand, minimizing investment in infrastructure, human capital, and research. Moreover, our financial sector is far too large as a percentage of our economy. Too much of Wall Street’s wealth comes from extracting rents. It uses its wealth to further skew economic policy.
Thus, while I’m less confident in his assessment than Smith is, we should take very seriously his conclusion:
China is now in a position similar to that of the US at about the turn of the 20th century – a formidable superpower that just hasn’t yet felt any reason to exercise its dominance. Once the US woke up to the need to throw its weight around, no one doubted its primacy.
I’d be more sanguine about all of this if it weren’t for developments in China, the United States, and Europe. As you probably know, the 19th National Congress of the Communist Party of China is underway. It comes at a time of increasing Chinese assertiveness in international affairs, and of the aggressive shrinking of civil society within China itself. China is becoming more authoritarian and more dictatorial. Meanwhile. the liberal democratic powers are in disarray. The United States and the United Kingdom, in particular, are not only suffering from inflicted wounds, but have, more or less, their least capable leadership since the 1930s.
The “special correspondent” at Foreign Policy has an essential primer on Xi and the political state of play in China. This really is ‘go read the whole thing’ territory, and probably before you continue with this post. From the conclusion:
In the run-up to the Party Congress, Xi has been given a prominence far exceeding any Chinese leader since Mao Zedong. Even when he was general secretary, it was very easy to forget that Hu Jintao existed; late at night, Hu himself might have had doubts. But Xi is everywhere — slogans, posters, daily television. The contrast in visual imagery between the blank-faced Hu, never allowing an iota of emotion to slip, and the easily confident, in-command Xi is startling. New slogans now circulate with Xi’s name attached in a way that Hu’s own effort, the “harmonious society,” never managed. “Xi Jinping’s Chinese dream.” “Xi Jinping’s Belt and Road Initiative.” Some of this was mandated, but much of it is voluntary, eager signaling by everyone from academics to businesses that they are on board. Xi’s name can be crammed into anything, no matter how irrelevant or insignificant.
What will Xi do with this power? There are still a few optimists who believe that economic reform is the next step, now that he has the power to override resistance. But all indications so far have been of the primacy of the party-state in the economy, just as in every other aspect of life — a fact reiterated by Xi in his opening speech at the Party Congress. As Americans have found since 9/11, it’s harder to wind down a security state than it is to crank it up.
As for how popular Xi genuinely is, it’s hard to judge; he certainly seems to have a strong base with the middle-aged homeowners who make up the central pillar of party support. Inside the party, things seem far less certain. One of the underappreciated achievements of Xi’s earlier predecessor, Deng Xiaoping, was to break the country out of the cycles of political revenge that had begun in 1949. Part of that bargain was the collective leadership system, upheld even by those temporarily at the top in the knowledge that the winds could change. Xi has snapped some, if not all, of the links that kept things from getting out of hand.
After reading the article, you should take a look at Martin Kettle’s reaction to Xi’s speech at the Guardian and Shawn Donnan’s report at the Financial Times on how the Trump Administration’s “pullback” from international institutions is leaving a gap that China wants to fill.
The prospect of a wave of “America First” protectionism and US tax reform in the US has loomed large over this week’s annual meeting of the International Monetary Fund and World Bank. Yet across dozens of public events a Trump administration that has been advertising its disregard for multilateral institutions has been largely absent. Filling in is a China eager to assume the US’s place as the new advocate for economic openness and international co-operation in the world.
This is all deeply worrying, both for the United States and for the nature of international order. When I was in Beijing last summer, I gave a talk about Trump foreign policy. A major component of it, which matters here, is the need to disaggregate the notion of liberal international order. This helps us not only to understand Trump, but to think about what a more powerful and assertive China might mean for international order. More ominously, it highlights how China’s recent trajectory requires a rethinking of how Washington approaches relations with Beijing.
So what is liberal international order? In its most restrictive sense, it requires some kind of commitment to open trade. A more expansive conceptions stresses multilateralism over unilateralism and bilateralism, and pursues cooperative attempts to address global commons problems, such as piracy and climate change. At its broadest, it entails baking a preference for liberal rights and democratic institutions into international order. In a general sense, the American post-war order has combined aspects of all three. This is not to say that it has done so consistently, or to whitewash Washington’s support for dictators and human-rights abuses—here’s a particularly horrific example from the National Security Archive.
For decades, the major debate within American foreign-policy circles—the so-called “blob“—concerned not whether liberal order, but how. That is, the traditional tension has been between those who stress, on the one hand, the importance of intergovernmental liberal order and, on the other hand, the enlargement of the space directly governed by liberalism. This tension is easiest to grasp through the neoconservative criticism of liberal internationalists. As I wrote back in 2005, when neoconservatives were still a major force:
The neoconservative critique… is premised, instead, on a particular set of trajectories from within the American liberal tradition and on a diagnosis of current conditions in international relations.
1. If the United States embodies liberal values – correctly understood – then institutional restraint on the US will always be illiberal.
2. Many international institutions, but particularly the UN, reflect the same leftist “relativistic multiculturalism” that threatens those values at home. After all, the UN is filled with dictators, bureaucrats, human-rights abusers, members of the non-alligned movement, and all sorts of illiberal types. What could be more frustrating than the basic rules of diplomacy that operate at the UN, which allow, for instance, representatives of genocidal regimes to pass judgment on human rights violations?
3. It follows that if we had robust international institutions, understood as ones that genuinely reflected core “western” and “liberal” values, they would improve international order and security. Hence the proposals floating around for “democracy clubs” and the like.
In other words, we should take seriously the claim that neoconservativism involves “a resort to unilateralism when necessary.” The reason it often seems necessary is, in neoconservativism, a failure of the current order, not because of any generalized neoconservative rejection of the possibility of a liberal institutional order.
Regardless of what you think of these claims, it is, I think, undeniable that a commitment to the intergovernmental aspects of liberal order—most notably multilateral cooperation—does potentially tradeoff with the goal of increasing liberal governance within states. When you build international order around confederations of sovereign states—some global, some regional, some functional—you empower and thereby shield illiberal and undemocratic regimes. In that sense, you restrict the possibilities for enlargement.
Liberal internationalists generally respond to this tension in two ways. First, they argue that the tradeoff is acceptable. It produces a more peaceful, rule-based order capable of addressing collective problems. Second, they often assume, or at least hope, that the three legs of international liberalism reinforce one another. In this, they echo aspects of Kant’s Perpetual Peace: A Philosophical Sketch, from which liberal internationalism derives.
We saw this second argument a lot in the 1990s and 2000s, especially in policy debates about China. Policy makers often fell back on the idea that China’s integration into the world economy and, more broadly, the international order would build an outward looking middle class and help produce a gradual movement toward liberalization and democratization.
Paul Musgrave and I develop this way of thinking about liberal order and US foreign policy in a book chapter on liberalism and imperialism. Here’s the key visualization, from one of the slides that I use when I present it:
Basically, if you’re an American liberal or a progressive, and you think (correctly) that the world is going through a power transition away from the United States and Europe and toward China and Asia, then you want to shift to the center left. That is, you want the transition from liberal hegemony to take us into the zone of liberal multilateralism. You recognize that the kind of liberalism that results won’t be purely Made in the USA. It will be negotiated, and reflect the interests and values of other powers. In fact, my colleague, Charles Kupchan, argued in the 1990s that the major goal of US foreign policy should be to consolidate multilateralism, regional integration, and otherwise lock in a more benign order before it lost the opportunity to do so. In some ways, the Clinton administration embraced this vision, but it also bungled it in ways that we’re still dealing with.
From this perspective, what we’re seeing now is a grim convergence. Things are not, to put it mildly, looking good for the liberal internationalist wager about China. And a growing number of elites in China and the United States see some kind of clash as inevitable.
Meanwhile, Russia has adopted an increasingly revisionist stance toward key aspects of liberal order. We see democratic backsliding and increasing illiberalism—albeit to very different degrees—in countries as diverse as Poland, Hungary, Turkey, Israel, the Philippines, and the United States.
These developments are not independent. Indeed, they bootstrap on one another. Chinese economic clout and its availability as an authoritarian capitalist model matters. As do Russian attempts to delegitimate western liberal democracies via information warfare and support for populists and secessionists.
Trump’s dispositions are so unusual precisely because they reject both liberal enlargement and liberal intergovernmentalism. As I’ve argued before, both Trump’s predilections and his approach to diplomacy point in the direction of geopolitical suicide: of scrapping the infrastructure of power enjoyed by the United States. Even as China overtakes the United States on some measures, the United States still maintains alliances with almost all of the second-tier economic and military powers. It makes no sense to routinely disparage and undermine these partnerships. Of course, Trump’s domestic policies are no better: they extract short-term benefits for the wealthy at the cost of the underlying engines of American power.
Taken together, all of this suggests that, at best, the United States is wasting time that it, quite frankly, may not have. I know some readers here will think this is all for the best, because they don’t care for both the theory and practice of American leadership. But I submit that global economic and political interconnectedness makes it increasingly difficult to achieve progressive goals within the borders of individual states.
The weaker America’s hand, the more likely we are to get a more minimal variant of liberal order, one with open trade and plenty of multilateralism, but little in the way of ‘baked in’ preferences for human rights and democracy. A China that fills the vacuum will do so as a totalitarian party state—quite likely constituted around individual leaders with cults of personality—and with a hybrid of capitalism and socialism quite different from what liberals or progressives would find attractive. It’s not that the United States should be preparing for an inevitable Cold War, but that it needs to remain engaged, credible, and primus inter pares in a web of alliances composed of most of the world’s advanced industrial states.