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China’s productive capacity is three times as large as that of the United States—a decisive advantage in military and technological competition—and exceeds that of the next nine countries combined. In the two decades after China joined the World Trade Organization, its share of global manufacturing quintupled to 30% while the U.S. share halved to roughly 15%; the United Nations has estimated that, by 2030, the imbalance will grow to 45% and 11%. China leads in many traditional industries—producing 20x as much cement, 13x as much steel, three times as many cars, and twice as much power as the United States—and increasingly in advanced sectors as well. To achieve scale, Washington must transform its alliance architecture from a collection of managed relationships to a platform for integrated and pooled capacity building across the military, economic, and technological domains. In practical terms, that might mean Japan and Korea help build American ships and Taiwan builds American semiconductor plants while the United States shares its best military technology with allies, and all come together to pool their markets behind a shared tariff or regulatory wall erected against China.
[Neil Shearing] argues that the US would come out ahead from a fracturing of the world economy. The main justification is that America’s allies are more economically powerful than China’s because they include almost all advanced countries.
At market prices, the US bloc’s share of world GDP is 68%, against the China bloc’s 26%. Even at purchasing power parity, the US bloc’s share is 50%, against the China bloc’s 32%. In the end, the most economically potent countries in the world will stay closer to the US, because they depend on its security umbrella, its markets and its currency, or because, in the last resort, they distrust China more. China would also lose more than the US from a fractured world economy. One reason is that it has a structural current account surplus. The only countries where these funds can be safely invested are the US and its allies. The alternative is to lend vastly to developing countries, which may be unable to service their debts. |
SOLZHENITSYN & HAYEK: NOBEL PRIZE; BOTH MEN DEFEATED POSITIVISM.
AuthorAn authority on Southwest Asia political economy, and international columnist. covering 'the long war'.
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