MSc Development Management candidate Joe Spillane unpacks the current rivalry between China and the United States and investigates two possible interventions that could propel China to global supremacy.

It’s a question that’s been asked many times, by many people, for many years: will China overtake the US as the world’s leading power? China’s ascendance represents the most significant shift in global power since the end of the Cold War. Centuries of American and European hegemony are being challenged by advancements in technology, economic growth, and diplomatic relations that are all led by China. Even though it has made tremendous strides in building up its military and strengthening its diplomatic capacity, the paradox of China’s high gross domestic product (GDP) coupled with low GDP per capita, and its exclusion from crucial free trade agreements, are the main reasons why it lags behind American supremacy. However, through poverty alleviating efforts and further trade negotiations, it is possible for The Sleeping Giant to, in the words of Napoleon, “wake up and shake the world.”

The proliferation of the Chinese military is the greatest challenge to America’s hegemony as a global war power. Not only does China have 2 million more personnel than the US military, but it also has the highest number of active-duty combatants in the world, counting 2,185,000 members. China is also poised to quadruple its stockpile of nuclear warheads by 2035, bringing it to close parity with the United States. However, the most significant clash between the two involves two territorial disputes: the South China Sea and Taiwan. The South China Sea connects much of East Asia to critical trade routes through the Strait of Malacca, so the country that exercises the most power over this area can also control the safe passage of trade to India and Africa. China is increasing its military presence here by building artificial islands on coral atolls, deploying fighter jets to surveil the skies, and setting up over 20 military outposts to monitor shipping activities. The American and Chinese navies have already exchanged a handful of cruise missiles, and few efforts have been made to de-escalate these tensions. Regarding Taiwan, reunification with the mainland has long been an agenda item for the Chinese Communist Party. In October 2022, President Xi Jinping delivered multiple emblazoned speeches warning foreign powers, notably the United States, against interference in a “peaceful” reunification. To “achieve a great rejuvenation of the Chinese nation,” the military has ramped up preparations for a possible invasion, which puts the United States in a precarious diplomatic position – so much so that American businessmen have begged Congress to help relocate Taiwan’s semiconductor industry, the largest in the world, to new factories in Arizona and Ohio.

China is also becoming an increasingly popular diplomatic partner. As a member of the BRICS (Brazil, Russia, India, China, and South Africa) group, China has committed itself to promoting economic equality and mutual benefit across the developing world, which has strengthened its relationships with multiple African and Latin American countries. In fact, of the dozens of multilateral development banks that are scattered throughout the globe, four of them are now headquartered in China: The China Development Bank, the Asian Infrastructure Investment Bank, the Export-Import Bank of China, and most importantly, the BRICS’s New Development Bank. These four banks represent enticing alternatives to Western-dominated development institutions like the World Bank or International Monetary Fund and they also benefit from being backed by China’s fast-growing, relatively stable economy. This latter element distinguishes them from other non-Western development institutions that lack the political stability or economic footprint to support sustainable lending and borrowing.

The one sector where China continues to fall behind the United States is economic performance. This might be surprising since China is currently the second largest economy in the world and is poised to overtake the size of the US economy by 2050. However, measuring the Chinese economy solely in terms of GDP is misleading because it obscures China’s severe intra-country inequality. Using GDP per capita provides a more accurate depiction of how national income is distributed across its vast population. In 2021, Chinese GDP per capita stalled at $12,556.30, whereas the United States’ GDP per capita soared to $69,287.54. This means that the average income earned per person in the United States was more than five times that of China’s. Furthermore, China’s trade capacity is routinely challenged by Western free trade agreements that are deliberately designed to circumscribe Chinese expansion. For example, the Trans-Pacific Partnership (TPP) supported by the Obama Administration excluded China from free trade with economic partners on both sides of the Pacific. When the Trump administration withdrew the United States from the TPP in 2017, the remaining countries created the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which hinders China’s trade relations with Canada, Australia, and Mexico.

However, if China dedicates itself toward massive poverty alleviation and better openness to free trade agreements, it could reach its goal of becoming the world’s next superpower. Work is already underway toward internal poverty alleviation, with over 800 million people already lifted out of extreme poverty. Most of China’s poverty reduction efforts are concentrated in geographically disadvantaged areas, which has provided global policymakers with new lessons on how to use “targeted support” to combat persistent impoverishment. China is also negotiating several new free trade agreements, with the most important being a free trade zone between Japan and South Korea. If successful, this will provide free trade access to the third and thirteenth largest economies in the world. There is still much work to be done to propel China to the top of the world’s economy, but it is certainly possible that the Chinese economy can surpass the power of the US by 2050. It may also be too early to make definitive projections of China’s future. The effects of the COVID-19 pandemic have yet to be fully felt there, and the rising probability of an invasion of Taiwan could damage the diplomatic capacity it spent decades to build. Nonetheless, China is a force to be reckoned with, and the international community should pay close attention to how its ascendance unfolds.

The views expressed in this post are those of the author and in no way reflect those of the International Development LSE blog or the London School of Economics and Political Science.

Image Credit: 李 季霖 via Flickr.