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Joseph Nye

Joseph Nye

Posted: January 6, 2011 03:08 PM

China and the US

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Gideon Rachman, a good writer for the Financial Times, has an article in the current issue of Foreign Policy entitled "American Decline: This Time It's Real." In his words, "the wolf did arrive -- and China is the wolf." He cites Goldman Sachs prediction that by 2027, the Chinese economy will be larger than the American economy, and says that if Washington has to scale down its presence in the Pacific for budgetary reasons, American allies will start to desert us.

But as I argue in my new book The Future of Power (coming out on February 1), even if China's GDP passes that of the United States around 2030, the two economies will be equivalent in size but not in composition. In per capita income, (which is a better measure of the sophistication of an economy), China will not pass the US until decades later. And the United States is also well ahead of China in military and economic power and will remain so.

Even if Rachman is wrong -- as I believe -- his message can be helpful if it wakes us to make some necessary reforms in deficit reduction and improving K-12 education. But there is also a danger in exaggerating China's progress. (A 2009 Pew poll shows that 44% of Americans held the wildly erroneous view that China is the world's leading economy.)

If such views creates hubris among Chinese officials and fears in American officials, it can lead to policies that create unnecessary conflict. Managing the complex relationship with China will be difficult enough without such faulty projections. I will spend next week in China and India, and will post some of my observations after I return.