China is a peer economic power and may economically surpass the United States in the next decade. Yet the level of international disorder, combined with recent demonstrations of leaders’ agency, suggests the outcome for the foreseeable future remains too close to call.
Claims of China’s economic primacy can be parsed in many ways. Depending on the indicator, such as manufacturing scale or trade volume, China has more than closed the gap. Yet this trajectory is not immutable. The United States, particularly if it acts in concert with allies and partners, retains the ability to reverse unfavorable trends through policies to revitalize American industry while harnessing a collective innovation and advanced manufacturing ecosystem. Even so, we cannot say with confidence how this economic rivalry ends, because we don’t yet know the level of decoupling, how vital technological changes will unfold, or the impact of these changes on society and humanity.
An equally consequential issue as economic primacy is how power should be measured in the first place. Whether one country posts a larger GDP, attracts more foreign direct investment, spends more on research and development, or produces more steel, ships, or semiconductors matters less than whether those resources translate into usable power. Strategic outcomes matter more than raw outputs. What ultimately counts is power capable of delivering decisive effects, whether by reshaping the rules of the global trading system or generating the industrial capacity required to prevail in a protracted conflict. Perceptions of state power change slowly. Confirmation bias makes it difficult to absorb new evidence and fosters overconfidence, and these barriers to clear-eyed estimates affect both the American and Chinese perspectives.
Even discarding China’s narrative of inexorable rise and America’s terminal decline, the world remains transfixed by the rise of the East. China has come a long way since Mao’s revolutionary era of mass killing and ideologically driven economic experimentation. Deng Xiaoping, Jiang Zemin, and Hu Jintao nurtured development while stopping well short of full liberalization. Xi Jinping, by contrast, has re-centralized economic authority.
The forthcoming Fifteenth Five Year Plan is likely to codify what has been evident since 2012: politics and security now matter far more than growth. New productive forces and mastery of key technologies are intended to offset slowing growth and to prevent economic malaise from delegitimizing the party and provoking social unrest. Even as recent analyses suggest China will undershoot its growth ambitions, Beijing still appears capable of muddling through, even if a collapse of domestic cohesion should not be ruled out.
The tendency toward confirmation bias and overconfidence are also evident in the United States. It is now accepted wisdom, as many in the Trump administration have long claimed, that earlier elites too blithely assumed that engagement, international institutions, and global trade rules would gradually liberalize China. Still, the current administration’s overconfidence is visible even in carefully considered documents such as the recently released National Security Strategy. While the NSS rightly elevates economic competition, it also lapses into a bit of magical thinking by asserting that the United States will preserve peace and order through “overmatch,” a term so elastic as to mean almost anything.
The absence of a clear advantage today does not preclude a decisive shift tomorrow. Strategic balances can change abruptly if either side competes inefficiently, neglects foundational strengths, or stumbles into the extremes of conflict or capitulation. China has benefited from watching the United States erode its soft power and long-term investment in science and technology. At the same time, Beijing has obscured its massive rural poverty, structural dependence on exports, and deep resistance to economic reform that might challenge party authority.
My reasons for optimism would require another, lengthier article. However, if both countries choose to race to the bottom, it should not surprise us if, by mid-century, the global economic hierarchy looks very different indeed.