China's Economic Growth May Overtake US Soon: Tariff Battle Potentially Final Attempt to Curtail Beijing?
Outsized Global Impact: All Eyes on the Race Between U.S. and China
America's beef with China isn't just a matter of trade tariffs. It's about the looming specter of China overtaking the U.S. as the world's leading economic power. Analysts predict this shift could happen as early as the mid-2030s. This development is unnerving to the U.S., which has held the top spot economically for the last century.
The world, as we've known it, symbolized by the dominance of the West, is undergoing a fundamental shift, one that the people of the West might struggle to grasp. The institutions that now define the global landscape, including the United Nations Security Council, the International Monetary Fund, the World Bank, and informal groupings like the G7, were structured in a world where these powers set the rules.
Fast-Forward to the 18th Century: China and India Lead the Pack
A brief glimpse at history shows that as recently as the 18th century, China and India were the world's two largest economies. This was a time when there were few machines, and national productivity and output relied heavily on population. With a vast population, these nations topped the charts in terms of economic size[1].
A Modern Era of Technological Advancement
The Industrial Revolution saw a departure from agriculture-dependent economies, and technology became the key driver of productivity. The West took the lead in technological change and has maintained this position until today. China, however, is quickly catching up[1].
Citigroup published a report in January 2023, titled "When Will China's GDP Surpass the US? And What Will It Mean?", which concluded that catch-up is likely to occur somewhere during the 2030s, probably in the middle of the decade[1]. This momentous event will undoubtedly receive widespread attention and potentially have significant geopolitical consequences.
An Economic Titan: China's Growing Clout
China's economy has already outpaced the U.S. in several areas. The Chinese Navy boasts more ships than the U.S. Navy[5]. China built and operates an independent space station that challenges the ISS, led by the US and Russia. In the Paris Olympics last year, China won more gold medals than the U.S[5].
China's ambitious Belt and Road Initiative (BRI) is the world's largest infrastructure project, connecting Asia, Europe, Africa, and the Arctic. This project enhances China's geopolitical reach and economic dependencies across partner countries[2]. China is also the largest trading partner for 120 nations, compared to 70 for the U.S[5].
The Battle for Tech Supremacy
China's rise to economic dominance extends to technological advancements as well. Despite attempts to restrict its access to Taiwanese-made semiconductors and curb its artificial intelligence progress, China has proved resilient. Deep Seek, an AI produced by an obscure Chinese firm, demonstrated China's prowess in AI, and the firm even made the technology free, thwarting US efforts to monopolize the technology[5].
Huawei has faced Western bans but has overcome these hurdles by venture into manufacturing. By some estimates, Huawei is only a few years behind Taiwan's TSMC and Dutch firm ASML, the leading semiconductor manufacturers[5].
The Tariff War: The Last Stand?
The trade war and attempts to decouple the West's economy from China mark the latest effort to contain China's rise. However, if these measures prove ineffective, the only option left might be the use of military force[5].
China's vessels have begun avoiding U.S. ports since the imposition of tariffs, raising them to an absurd 245 percent[5]. The tariff war has the potential to cripple the U.S. more than China, as exports to the U.S. account for merely two percent of China's GDP.
A New World Order: The Rise of a Super Manufacturer
Say's Law of Market posits that supply creates its own demand. In other words, economies focused on producing goods will eventually find a market, whether internal or external, for those goods[5]. China, the world's largest producer of goods, fits this description.
As China continues to apply its strategy, the world may witness a more multipolar world order, featuring competing centers of power. The U.S. must now pivot, fostering innovation and resilience and deepening economic integration with allies like Canada to preserve a rules-based order and counterbalance China's state-driven growth model[4].
The author is the Chair of Amnesty International India. Twitter: @aakar_patel
Insights:- China’s economic growth challenges the U.S. hegemony and begins to shift global power dynamics.- China’s state-driven economic growth, technological ambitions, and aggressive infrastructure initiatives establish strategic partnerships, challenging U.S. influence in key regions.- Should U.S. sanctions fail, the use of military force remains a concern as a last resort to contain China's rise.- A more multipolar world order may emerge with competing centers of power emerging alongside U.S. and China.- U.S. must deepen economic integration with allies and foster innovation and resilience to maintain its global influence.
- The ongoing competition between the U.S. and China in politics and general-news, particularly the economic sphere, could potentially reshape the global landscape, challenging the traditional Western dominance that has been in place for over a century.
- As China's economic growth continues, it could lead to a more multipolar world order, with competing centers of power emerging, possibly causing a significant shift in the global political landscape. The U.S., in response, may need to strengthen its economic ties with allies and focus on innovation and resilience to maintain its global influence.
