From Chinese Press

Will China's rise lead to the decline of U.S.?

(peopledaily.com.cn)
Updated: 2011-05-03 14:24

The International Monetary Fund (IMF) recently made a bold prediction that China will exceed the United States and become the world's largest economy as early as 2016 in terms of purchasing power parity. This prediction seems to add new evidence to the popular statements made by some western analysts who believe China's rise is the main cause for the decline of the United States.

"Is the United States really on its wane?" "Will China's rise mainly lead to the decline of the United States?" Experts on international issues in Beijing pointed out that the proposition and judgment regarding the decline of the United States is controversial. Even if the United States is coming down, China's rise is not the main reason.

The IMF's prediction shows that according to the current growth rate, China's economic size will reach 19 trillion U.S. dollars in 2016 in terms of purchasing power parity while the U.S. economic size will reach 18.8 trillion U.S. dollars in 2016. Therefore, China will exceed the United States and become the world's largest economy.

"We will reach different conclusions from different angles regarding the proposition of the decline of the United States. I think, more specifically, U.S. power is now in the state of absolute growth and relative decline," said Ni Feng, deputy director of the Institute of American Studies under the Chinese Academy of Social Sciences.

Ni said that the United States showed a significant economic growth over the past decade, moving ahead of other developed economies such as the European Union and Japan, while the faster development of emerging economies indeed has brought the phenomenon of the relative decline of the United States.

However, Ni also stressed that the relative decline of the United States is mainly embodied in the economic field. The downward trend in fields such as politics, military affairs and science and technology is not obvious, and its performance in some fields has even become more outstanding.

Data shows that despite the severe economic downturns caused by the collapse of the Internet bubble in 2001 and by the international financial crisis from 2008 through 2009, the GDP of the United States, calculated at constant prices, was up 21 percent during a period from 2000 to 2010. Some economic indicators of the United States have dropped compared with other countries in the world. The proportion of U.S. GDP to the total GDP of the 19 other G20 countries stood at 61 percent in 2000 and dropped to 42 percent in 2010. The U.S. GDP was more than eight times that of China in 2000 and was less than three times that of China in 2010. "The U.S. GDP share of the world's total was once more than 50 percent after the second world war and stands at around 25 percent today. The strength of the United States by GDP has indeed comparatively declined, causing the United States to give up "the dominance of global economic affairs" and seek "multilateral cooperation" to deal with international economic issues."

The G20 including members such as the United States, Japan, China and India has become a major platform for managing the world economy. During the reforms of the World Bank in April 2010, developed countries shifted more than 3 percentage points of voting rights to developing countries. In October 2010, the IMF passed a reform plan transferring 6 percentage points of voting rights to underrepresented countries including emerging countries. With the continuous development of China-U.S. ties and in-depth changes in the international situation, the mechanisms such as the China-U.S. strategic and economic dialogue have emerged.

Yang Bin, an economist at the Chinese Academy of Social Sciences, said that the international financial crisis and the fall in the economic influence of the United States can be considered a reflection of the "decline" for the United States. However, the key reason behind the "decline" is not the "rise of other countries" but fundamental defects in its economic system and structure.

Yang said that the United States currently features a growing scale of financial monopoly capital, the deepening of economic "financialization," "virtualization" and "hollowing out," as well as the increasing share of speculation in economic activities, the excessive concentration of wealth to financial oligarchs and continued high unemployment rates. "The international financial crisis is just a warning. If the United States does not change its neo-liberal economic system and development mode, the deterioration in its economic strength will continue," Yang said.