Henry Kissinger's 2001 book Does America Need a Foreign Policy? opens with the observation that "[a]t the dawn of the new millennium, the United States is enjoying a preeminence unrivaled by even the greatest empires of the past. From weaponry to entrepreneurship, from science to technology, from higher education to popular culture, America exercises an unparalleled ascendancy around the globe." One decade, two military quagmires, and an economic meltdown later, few authors would venture such a presumption -- not least Kissinger, whose most recent tome reflects the obsession of those who have come to realize that the post-Cold War world is not so unipolar after all. It's called On China.
But for all the urgent attention paid to China in recent years, we might actually be underestimating how fast the world has already changed. This is the argument that Arvind Subramanian advances in Eclipse, his new book on the Sino-American balance of power. "The economic dominance of China relative to the United States is more imminent (it may already have begun), will be more broad-based … and could be as large in magnitude in the next 20 years as that of the United Kingdom in the halcyon days of empire or the United States in the aftermath of World War II," he suggests. Subramanian, an economist at the Peterson Institute for International Economics (and also a part-time colleague of mine at the Center for Global Development), notes that by 2010 China had overtaken the United States as the world's largest economy in terms of purchasing power parity (a measure that accounts for the fact that many goods are cheaper in the developing world).
Historically, there has been far more to global power than brute output statistics, of course. In 1870, when Britain was undoubtedly the world's top dog, it accounted for 9 percent of global output. But the economy of the United States, still a geopolitical start-up and barely through its catastrophic Civil War at the time, was already almost the same size -- and China's share was nearly the size of Britain's and America's combined, amounting to 17 percent of global output. And remarkably, this was at the beginning of a period roundly considered to be China's historical nadir: Twelve years earlier, China had signed the Treaty of Tientsin, a humiliating ending to a war with Britain that forced the Middle Kingdom to open its borders to foreign goods, accelerating a decline that eventually earned China the pitying epithet "the sick man of Asia." Indeed, China has been the world's largest economy -- though not its richest -- for most of the last 500 years, according to data from late economist Angus Maddison, who collected historical statistics on the global economy for the OECD.
But the 21st century is not the 19th -- China's place in the world and the nature of its power are quite different. Not least, China's growing prominence extends beyond simple measures of output. While the United States and the European Union each had shares of world trade more than four times larger than China's as recently as 2000, by 2010, their shares were all within a percentage point of each other (and China had overtaken the European Union). In 2000, China accounted for only 4 percent of world net capital exports; by 2010, it had climbed to 18 percent.
And when it comes to the technological and educational underpinnings of modern growth, while the United States is still far ahead, China is fast gaining. The World Intellectual Property Organization reports that U.S. filings under the Patent Cooperation Treaty dropped from 51,000 to 45,000 between 2006 and 2010. Over the same period, China's international patent filings tripled from under 4,000 to over 12,000. According to Subramanian, in 2006 China was producing twice as many science and engineering graduates as the United States, and by 2008 the United States' lead in peer-reviewed scientific article publications had shrunk by more than half from the sixfold advantage it enjoyed in 2002.
By 2030, Subramanian predicts, China is likely to account for about a quarter of world GDP compared with America's 12 percent, and 15 to 20 percent of world trade compared with 7 percent each for the United States and the European Union. China's share of global trade and GDP will look similar to those for the United States in 1950, and its net capital exports share similar to America's in 1973.