From Chinese Press

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

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

The U.S. economy has been faced with increasingly deteriorating problems of high fiscal deficits, high trade deficits, and high debts for a long time. The United States has been the world's largest debtor nation since the 1980s, but has managed to maintain economic growth by overusing the dollar hegemony, running up huge debts, and printing bills beyond reasonable bounds, which led to a lopsided financial development and a declining manufacturing industry.

Manufacturing, the principal part of a real economy, only accounts for about 10 percent of U.S. GDP and corporate profits. By contrast, service industries, mainly consisting of the financial services industry, account for around 80 percent of the country's GDP. The financial and real estate services industries generate over 40 percent of U.S. corporate profits.

The "financialization" of the U.S. economy is in fact "virtualization" and "parasitism." The value of the dollar against other major currencies has dropped significantly. When the dollar falls below a psychologically important level and loses its privileged status, foreign capital will withdraw from the United States quickly, leaving the U.S. economy at risk of collapse.

"The United States' economic power and influence keep falling due to its own perennial problems and the rapid development of emerging economies. While GDP is a good measure of the size of the economy, it cannot reflect the comprehensive national strength of a country. The United States is not really in decline if we fully consider its innovative strength, amount of core technologies, military strength, and other aspects," said Zhu Feng, a professor at the School of International Studies under Peking University.

U.S. military spending has been almost as much as the combined spending of all other countries in the world for many years. According to the statistics recently published by the Stockholm International Peace Research Institute, U.S. military spending rose nearly 3 percent to 698 billion U.S. dollars in 2010, more than that of any other country in the world. Worldwide military spending increased by 20.6 billion U.S. dollars last year, and the United States alone accounted for 19.6 billion U.S. dollars of the increase.

Thanks to its enormous economic size and large lead in business and technology, the United States topped world competitiveness rankings over the past many years. According to statistics from the World Intellectual Property Organization, the United States remained the world's largest international patent applicant with 44,855 patent applications filed in 2010.

The "China's National Competitiveness Report" blue book released by the Chinese Academy of Social Sciences in 2010 pointed out that the United States still has a relatively large overall competitive advantage, and its advantages in aspects such as global connections and the human resource structure are even more outstanding.

The blue book said that in the context of globalization, China's development took the road of "inclusive growth" and needs a fair, cooperative and open environment. It is inadvisable to equate the prosperousness of China's economy and the enhancement of China's competitiveness with the so-called "China threat theory."

Zhu said that it will not bring substantive changes in the international security system even if China's GDP ranks first worldwide. Measuring the international security system needs to consider more on various aspects such as alliance, overseas troops, delivery capacity of military power, and the breadth and density of global security partners. China currently has no capacity and desire to change the existing international security system.

"China will unswervingly follow the path of peaceful development and continue to develop through striving for a peaceful international environment, and will also safeguard and promote world peace with its own development," said President Hu Jintao during his visit to the United States at the beginning of 2011.