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Is the 21st-century American century – an analysis?

Mushtaq Ahmad Mahindro
With the onset of this century, it was widely acknowledged that the 21st century would
also be the American century although China was an extraordinarily emerging economy. But the
momentous growth China exhibited both in the economic and technological domain within the
first decade of this century and assuming the place of second-largest economy surpassing Japan in
2010 analysts started apprehending China as the next challenge to American hegemony at the
international level. China’s embarking upon BRI in 2015, the world’s largest economic project
encompassing more than 100 countries, the politico-economic analysts are not short of throwing a
shadow on the American position of enjoying the status of the sole superpower of this century.
They are now vividly exclaiming that the present century was an American century before 2015.
Now it has started losing in favor of both China and Russia.
Going a little bit in history we can say that the base of present China was laid down by Den
Xiaoping in 1978 when he introduced market reforms which started attracting transnational
corporations (TNCs) from all over the developed world into China making it the largest exporter
of the world at the moment.

There is no blinking the fact that power moves through the economic corridors. It was true
for Great Britain during the colonial era, it is true for the USA at the moment and it appears to be
gaining weight in the years ahead in favor of China. The relative decline has started for the USA
in favor of China though still the former enjoys both economically and militarily a formidable
position at the international level.

The dismemberment of the Soviet Union, the abolishment of the Warsaw Pact, and the fall
of the Berlin wall in 1989-90 was the climax of the USA. NATO started expanding towards the
East making Russia squeeze. The fall of Baghdad in 2003, and before that capture of Afghanistan
in 2001 also put a stamp on the American century. It was said at that time that the post-cold war
era is the American century era. However, the notable politician also hinted at the emerging
multipolar world in one way or the other. For instance, in 1990 Margret Thatcher said that the
world was dividing into three political spheres, dominated by the dollar, yen, and the Deutsche
mark. Likewise, Henry Kissinger in 1994 in his book ‘diplomacy’ predicted the dawn of a new
multipolar age.
Multi-polarity was visualized in 1990 but not in the sense that China would be posing any
challenge to the United States. Even in 2001 when the United States entered Afghanistan it was
supported by its European allies i.e. UK, France, and even Russia and China. But things changed
when the United States invaded Iraq in 2003. It lost the support of France, Russia, and China.
Hence Iraq was the turning point. Chinese spectacular economic rise by 2010 happened to be a
tectonic shift.
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Russia under Putin stabilized to the extent that when the Western powers managed to change
the pro-Russian regime in Ukraine in 2014 Russia managed to annex Crimea and started a
movement for autonomy in Russian-speaking Eastern Ukraine adjacent to Russia. By 2019 Russia
gained the confidence to the extent that it went for an aggressive posture in protecting the Bashar
regime in Syria in absolute defiance to the United States’ policy in Syria. This all speaks about the
ending of the uni-polarity of the United States. The same political reality was also witnessed during
American elections in the form of a slogan like, ‘let us make America great again’.
Under the circumstances, the great pressure on the Trump regime was to give a boost to the
American economy. First president trump went for a parting away policy. He dissociated from
Trans-Pacific Partnership (TPP) and decided to deal with the countries on a bilateral basis. He
further went for the imposition of tariffs on imports from other countries notably on steel and
aluminum and earned the resentment of not only China but its old allies like Canada, EU, and
WTO. This all led to a trade war with China as China retaliated in the same coin. Hence the
impression that the USA is declining started to prevail.
At the same time, China kept on moving on the economic front and didn’t poke its nose into
changing and protecting regimes in the world. On the other hand, the NATO expansion policy of
the West caused the birth of a robust economic organization is the Shanghai Cooperation
Organization (SCO) which included India also. This organization could be visualized as a
countermeasure or having a great neutralizing impact against any economic sanctions imposed by
the United States against any country.
When we look into the causes of this relative decline of the US economy and emergence of
Chinese we see that globalization hurt the United States, as TNC’s started leaving their home
countries notably in the West for China hungry for cheap labor and utilities along with the
attractions of huge Asian markets. China accumulated a huge cheap exportable surplus to be
exported. Resultantly America along with other countries became net importers of Chinese goods
with a huge negative balance of payments. This all started a trade war with China. Unemployment
became a great problem for America and European countries except for Germany. In the UK this
resulted in Brexit and America, it brought Trump into power as he talked against the immigrants
particularly the Latinos. Europe except Germany has started shuttering its borders for the
immigrants in response to rising xenophobic sentiments.

The West now considers that the WTO in 1995 was not a good decision as they are not at
present at ease in protecting their economies from the international competition especially posed
by China and East Asian countries. But at that time it suited them because China and the East
Asian phenomenon in the present form were not there. Now the countries which led the world
towards economic openness have started retreating into protectionism.

Despite all this will the economic pendulum will keep on moving towards China the biggest
challenge to America at the moment? It depends on the Chinese capacity to face the challenges it
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is going to face with the ever-decreasing number of its young working force in the face of
increasing old age people. These demographic challenges are not there at least in the United States.

China’s one-child policy as adopted in 1979 has started showing its negative impacts on its
young working force. It was in this background that China ended this policy in 2015. China’s total
fertility rate i.e. birth per woman which should be 2.1 has come down to around 1.5. In areas like
Shanghai, it is even one. That means china’s over 65 population is going to explode shortly.
According to one estimate “it may rise to 325 million from the existing 135 million by the year
2040” (Why Population will drive geopolitics- by Nicholas E Bierstadt). By 2040 India’s working-
age population may exceed China and at that time china’s over 65 population would be around
24% against India’s 12%. This all is going to make Chinese labor expensive. This may lead TNCs
to move towards those countries where the labor cost is not only cheap but they are closer to big
consumer markets, for instance, Mexico with respect to USA, Turkey and East European countries
for the West European countries, Malaysia and Thailand for Japan and wealthier parts of China.
The shortage of young working force in China may also benefit India, Bangladesh, Vietnam, and
Pakistan concerning extremely labor-intensive industries.
On the other hand, the American advantage is that its fertility rate is higher than China i.e. 1.8
(against the ideal 2.1 to keep the population intact) on account of its welcoming immigration
policy. Around 50 million people immigrated to the USA from 1950 to 2015. It is at present the
third most populous country after China and India. By 2040 its population may increase to 380
million from the existing 330, and it will have a higher younger population than any other rich
country in the world. By 2040 it will have more births than deaths. In Japan, deaths are
outnumbering births. That is one reason for its waning economy as it didn’t encourage immigrants
like the USA.

As per the World Economic Forum analysis, China would overtake America as the world’s
biggest economy by 2028. That would be 5 years sooner than previously expected. That is due to
China’s affective response to COVID- 19. China’s economy grew by 1.9 % in 2020. The US
economy, meanwhile, shrunk by 4.3%. China is the only major economy to have avoided recession
in 2020 despite the first country to be hit by the virus. China’s rapid strict response meant it avoided
repeated lockdowns and the economic damage that results. Economists expect China’s economy
to grow by 5.7% a year until 2025. While the US is poised to grow by just 2% annually over the
same period. This disparity would wipe out America’s lead within 7 years. However, the average
Chinese person is likely to remain far poorer than their American counterpart, given the Chinese
larger population, and COVID’s effect on slowing poverty reduction.
In the wake of the aforementioned inter alia its competitive edge in innovative domains, it
appears that the American economy may not be waning to the extent as visualized by some
analysts. It will be the most important player in the international politico-economic arena along
with other emerging nations notably China and Russia.
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