When if ever will China overtake the US?

Musings on the Thucydides Trap: Sino-US rivalry for global hegemony


by Kumar David

"Let China sleep; when the giant wakes up, it will shake the world" – Napoleon in 1803

The answer to the question in my title has to be fine grained; it depends what factors you include. Those who make broad-brush responses (10 years, 25 years, three decades etc.) are clumsy since more fine-grained, filigreed and precise assessments can be made. Specifics will help everyone, political analysts, businesses and governments to make decisions in their respective domains. I have condensed my presentation into 15 points, made provocative predictions, offered reasons for some and synoptic comments on others. All are to be treated as starting points for further reflection.

The odds that anyone will endorse all my musings in these fifteen rows are infinitesimally small. But that’s just the point; I want to get an informed discussion going among those who know what they are talking about. Therefore, comments to back-up the table follow.

Strategic and Economic

America, supported by dozens of bases and eleven aircraft carrier battle groups, is capable of projecting power across the globe anywhere from the Atlantic and the Pacific to the Middle East, Europe, Americas and Australasia. Pax-Americana is a global imperialist strategic project that China does not need to replicate or compete with, or will it attempt to. China aims at global economic sway as an extension of its booming production capability and burgeoning surplus of investible savings surpluses (capital). Its military outlook is defensive. Its claim to Taiwan and its bullying claim to the entire South China Sea riding roughshod over all the smaller littoral states is misguided but argued as a defence of sovereignty.

The strategic arena in which China will compete is space, electromagnetic weapons and cyber; that is twenty-first century warfare. From reading I have formed the impression that China is probably ahead in potential satellite-based aggression and on a par in laser-like weapons and internet aggression - the Russians are the masters of the last. It is likely that it will be able to knock out global satellite networks, paralyse military-logistics, GPS and power grid and disrupt global supply chains. If China is not already on par in these domains, it will soon be.

Though assured mutual destruction will be the outcome of nuclear war between these two adversaries, China has nothing to match US airpower and its fleet of stealth aircraft. The US also has top-order surveillance, targeting capability and drones for remote intervention. It takes time and a concerted effort in research and development to catch up in these domains. Taking an overview of these several aspects I suggest it will take China up to two decades to reach parity.

Manufacturing in the sense of industrial production has collapsed in the US and will never rise to global dominance again. I make it a point to search the domestic white good and electronic equipment departments of mega-malls in the US whenever I get the opportunity. I can say with reasonable confidence that there is not a single-made-in-US washing machine, microwave oven, TV, dishwasher, refrigerator and all that domestic appliance and entertainment stuff in big stores. All or nearly all this sort of stuff comes from China, South Korea, Mexico and Vietnam; ditto for clothing, shoes, handbags, luggage and myriads of paraphernalia from power tools to nail clippers. And the changeover happened 15 years ago. The US is now non-existent in the manufacture of durable goods.

AI and robotics: Made in China 2025 is a strategic plan issued by Premier Li Keqiang in May 2015. With it, China aims to move away from being the world’s "factory" to high value products and services. China will never back away from state leadership of the economy. State subsidy of cutting-edge technology is a fundamental that it will not abandon even if Trump stands on his head and WTO goes tut, tut. Actually, the state subsidises high-tech and research in all countries and the spin off from military investment and space is a huge factor driving technology in all industrialised nations.

The Thucydides Trap

The key industries in the Made in China strategy have sprung a Thucydides Trap.

Information Technology, internet-of-things and smart appliances

Robotics, AI and machine learning

Green energy, green vehicles, energy efficiency and electric vehicles

Aerospace equipment

Ocean engineering and high-tech ships

Railway equipment

Power equipment

Advanced materials

Pharmaceuticals medicine and medical devices

Agricultural machinery

Thucydides (c.460 – c.400 BC) a historian recounts the struggle between Sparta and Athens in the History of the Peloponnesian War. A Thucydides Trap is a dynamic that arises when an established power fears a rising one that threatens to displace it. Rising Athens was a threat to Sparta; in the late 19th Century Germany challenged Britain; today the US fears relegation to second place by China in the global economic stakes and in the political and the regional military stakes in Afro-Asia. This is what makes the evolving scenario dangerous; Americans cannot accept the idea of relegation to second place. Bellicose Trump and his baying base are the loudest trumpets but this sentiment cuts right across society. The rise of China is inexorable, sometimes slow sometimes fast, but relentless; it’s simply a dynamic of history not willed by anybody. A Thucydides Trap has been sprung and this along with climate change will be the two principal concerns of the twenty-first century.

What is the current ranking status re this list? China has pulled ahead on IT, Robotics/AI, Green Energy & EVs, and Railway and Power Equipment. It lags in Materials Science, Aerospace and Pharmaceuticals/Medical. I don’t know enough to comment on Oceanographic Vessels and Agricultural Equipment; probably it lags far behind.

Finally the final items in the Table; Education, Finance/$ Domination and Democratic Governance. China’s primary schools can in some ways claim to be better and none of its secondary schools are blackboard jungles scraping the bottom of the barrel like. American secondary schooling, at least the lower end, gets very low international ratings. Its best universities occupy never less than 12 slots among the best ranked in the world by any measure but two from China, Peking University and Tsinghua, are also there. Three if you count HKU as a university in China.

Nurturing a great university is not only about pouring money, the Chinese are doing this by the boatload, it’s not only about, laboratories, computer-centres, libraries campuses and student dorms. It’s not even only about paying high for renowned professors, scholarships for the brightest and the average students, funding for research, papers published and patents secured. All this counts, but it takes decades if not centuries to nurture a great university; it’s about an ethos, a culture of scholarship, intellectual freedom and a community of teachers and students. China has a long way to go in these respects. Harsh critic though I am of liberalism, I grant that it has set the gold standard here.

An overview essay is incomplete without a more pensive, perhaps philosophically inclined closure. I am confident that China will make it there to the frontline in this century. Material and tangible things giving its 1.3 billion a decent life will get done within a decade or two; in amorphous matters take longer. Democratic socialism I know not when; Marx insisted it was possible only in a world society. The 21-st Century with its confluence of global madnesses, driving or ameliorating each other, leaves humanity no other option. China’s future in an epochal sense belongs not to China but to the world. And the world needs to pass beyond capitalism as we have known it for centuries to a polity where social needs, individual abilities, collective economic trending, efficiency of the market in resource allocation and enterprise, and a wise relationship with Gaia are brought together.

China’s Hong Kong Options

Politics also counts; as an example of clout let me discuss the recently much distressed case of Hong Kong (HK). China can quell HK not with guns but dollars, economics, water, food and electricity (90+% of meat, vegetables and shellfish and 75% of water come from the Mainland while 25% of electricity is from the Daya Bay station in Guangdong). Air traffic at Chep Lap Kok is impossible without overflying Chinese airspace. HK’s importance to for China is overrated. At hand over (1997) HK’s GDP was 17% of the China’s, now it is a mere 3% because the Chinese economy has become huge. Neighbouring Shenzhen already surpasses HK in population, GDP, industry and technological sophistication. Beijing has lost faith in HK so it is pouring resources into making SZ a showcase beside which HK will be dim.

There could be a temptation for China to say "Let Hong Kong stew; let the loony fringe rant so long as it remains a side show" though this will be unpopular in China where people who are angry with HK and want it brought to heel. The size of the Shanghai stock market exceeds HK. If the government wishes it can push it to overtake HK. It’s really silly to bet against a $15 trillion economy and a population of 1.3 billion. (What can derail this is if HK’s delinquents, desperate to draw attention to themselves, escalate violence. The more Beijing ignores them the more frantic they will be to hog the limelight).

HK was a sleepy village of less than a million at the end of WW2; now it’s a bustling city that I love. Prosperity is due to three factors: China, HK’s people, and the Colonial Legacy. When the revolution won in 1949, the money-pots of Shanghai and millions downtrodden by the horrors of anti-Japanese and civil wars fled to HK giving it a great demographic and financial boost. Later when an economic miracle fired-up in China, the biggest beneficiary was HK – entrepot, financial & banking centre, deal making hub. Even now 90% of all transactions that keep HK’s banks and financial markets buzzing are China related. The foundation of HK’s prosperity was the explosive growth of China’s economy.

People: The industriousness and quickness of wit and reaction of HK people is legendary; without it, HK will be nothing. Finally, the Colonial Legacy: Traditions of jurisprudence, law, top-class public-service and police, and a fabled Independent Commission Against Corruption (ICAC) have established a playing field making Hong Kong the envy of others. It is these traditions that China does not have and had better acquire if it wants to be not only a global power but also a civilised one in the modern sense.

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