Some interesting take and observations:Stop Obsessing About Chinahttps://www.foreignaffairs.com/articles/china/2018-09-21/stop-obsessing-about-china?cid=int-flb&pgtype=hpg
But this emerging consensus is wrong and the policy response misguided. China is not about to overtake the United States economically or militarily—quite to the contrary. By the most important measures of national wealth and power, China is struggling to keep up and will probably fall further behind in the coming decades. The United States is and will remain the world’s sole superpower for the foreseeable future, provided that it avoids overextending itself abroad or underinvesting at home.
The main piece of evidence typically cited for China’s supposedly inexorable rise is its large gross domestic product (GDP), along with various other statistics that are essentially sub-components of GDP, including industrial and manufacturing output; trade and financial flows; and spending on military, research and development (R&D), and infrastructure. These gross indicators, however, are terrible measures of a country’s power. As I show in a new book, they fail to track the rise and fall of great powers over the past 200 years and perform little better than a coin toss at predicting the winners and losers of international disputes and wars.
In fact, by these very measures, China was at the top once before: in the nineteenth century, China had the world’s largest economy and the largest military. It also ran a trade surplus with other great powers. Yet many Chinese citizens today think of this era as a “century of humiliation” during which their country lost huge chunks of territory and most of its sovereign rights to smaller rivals, most notably the United Kingdom and Japan. Similarly, nineteenth-century Russia had Europe’s largest GDP and military, but it suffered a series of crushing defeats by the United Kingdom, France, and Germany that culminated in the collapse of the Russian empire in 1917. In the last century, the Soviet Union outpaced the United States by most measures of gross resources, including industrial output, military and R&D spending, and the number of troops, nuclear weapons, scientists, and engineers. It still lost the Cold War.
To become a superpower, by contrast, a country needs to amass a large stock of economic and military resources. To do this, in turn, it must be big and efficient at the same time—not one or the other. It must not only mobilize vast inputs but also extract as much as possible from these inputs. In short, a nation’s power stems not from its gross resources but from its net resources—the resources left over after subtracting the costs of making them.
To get an accurate sense of a country’s overall power, then, analysts need to account for these costs. In recent years, the World Bank and the United Nations have taken up this task and published rough estimates of countries’ net stocks of resources. Their analyses focus on three areas: produced capital (man-made items such as machines, buildings, fighter aircraft, and software), human capital (the population’s education, skills, and working life span), and natural capital (water, energy resources, and arable land). In addition, the investment bank Credit Suisse has published data on countries’ net stocks of privately held wealth. Although these three databases use different data and methods, they largely paint the same picture: the United States’ net stocks of resources are several times the size of China’s, and its lead is growing each year, possibly by trillions of dollars.
It gets even more astonishing. These numbers are conservative estimates, because they rely on Chinese government statistics, which exaggerate China’s output by as much as 30 percent and ignore numerous costs that erode its wealth and military capabilities. Chinese businesses, for instance, use roughly two times more capital and five times more labor than U.S. companies to generate the same level of output. More than one-third of China’s industrial capacity is wasted. More than half of its R&D spending is stolen. Nearly two-thirds of its infrastructure projects cost more to build than they will ever generate in economic returns. China also spends hundreds of billions of dollars more than the United States every year to feed, police, and provide social services to its population.