With the Chinese economy set to overtake the American economy in terms of absolute GDP in the next few years, many in the U.S. and allied countries are taking solace in the fact that China will be far poorer than America for the foreseeable future. This is perfectly logical if one’s deciding which country to live in. However, history suggests that it says little about China’s ability to challenge the U.S. internationally, particularly within the Asia-Pacific.
Although a country’s economy is unquestionably the foundation of its national power, the relationship between the two variables is far from perfect. As I noted last week, the Soviet Union’s economy was at the best of times about half the size of the American one during the Cold War. Often times it was much, much less. The disparity between the economies of NATO and the Warsaw Pact was often times much greater. Indeed, by the late 1980s, Germany had a larger absolute GDP than the Soviet Union; Japan’s economy was well over twice the size of Moscow’s during this time. Still, this not did prevent the Soviet Union from posing a substantial strategic threat to the U.S. and its European allies during the Cold War era.
Similarly, according to the Los Angeles Times, in 1940 Japan’s population was about half that of the United States, while its economy was one-tenth as large. Nonetheless, following Pearl Harbor Japan was able to sweep through much of the Asia-Pacific and seize territory from the U.S., England, and the Dutch. In key battles like the one at Java Sea, Japan was also able to defeat the joint militaries from those three countries, which also had help from key commonwealth nations like Australia and New Zealand.Enjoying this article? Click here to subscribe for full access. Just $5 a month.
But if absolute GDP is an imprecise measure of national power, the relative wealth of nations is often even more inaccurate. Given the much larger population size of the Soviet Union relative to the U.S., for instance, the gap between America and the Soviet Union’s GDP per capita was even larger than the already large gap the size of their economies. Similarly, in 1970 the Soviet Union’s GDP was greater than Japan and France’s combined. However, both Japan and France were richer than the Soviet Union.
The situation was much the same in Europe during the run-up to both the World Wars during the 20th century, when, as the fighting showed, Germany was by far the most powerful European nation. This greater power was usually reflected by the size of its economy. For example, according to Broadberry and Klien, in 1913 Germany’s GDP was $280 million in 1990 prices, while France’s was only $129 million and Great Britain’s GDP was around $229 million. However, Germany’s population at the time was around 67 million people whereas France had only about 40 million people and Great Britain about 45.5 million. Thus, France’s GDP per capita was under a thousand dollars less than Germany’s while Great Britain had a GDP per capita nearly a thousand dollars larger than Germany in 1913.
The situation was much the same in 1937, right before the start of WWII when Germany demonstrated a clear military dominance over other European nations, most dramatically, France. This again is reflected in absolute GDP figures, but less so in GDP per capita. Thus, in 1937, according to Broadberry and Klein, Germany’s GDP stood at $328 million (in 1990 prices), whereas France’s GDP was a meager $176.4 million and the U.K.’s was $295.5 million. Yet Germany had 20 million more people than the U.K. in 1937 and about 26 million more than France. Thus, in terms of GDP per capita, France’s was only $629 less than Germany’s whereas Britain’s GDP per capita was actually about $1,500 more than Germany’s. Still, this did not stop the Nazi forces from quickly overrunning France and Western Europe despite Britain’s help, and only the English Channel made it impossible for the Third Reich to capture the United Kingdom proper.
During WWII, of course, Nazi Germany became bogged down in Russia and indeed it was the Soviet Union that contributed overwhelmingly to Nazi Germany’s defeat in the war. According to most estimates, some 80 percent of Nazi casualties during the war occurred on the Eastern Front, and a similar if not a greater percentage of Germany’s overall troops were deployed along the Eastern Front at most times during the war following the 1941 invasion of the Soviet Union.
The Soviet’s Union ability to defeat Nazi Germany was reflected by its larger GDP. By 1937, the Soviet Union’s GDP had eclipsed that of Nazi Germany by some $43 billion. Yet the Soviet Union also was home to about 100 million more people than Nazi Germany, and thus it’s GDP per capita was less than half that of Nazi Germany’s in the years prior to WWII.
Thus, recent history makes it quite clear that a country’s relative wealth often is often a poor indicator of the degree of its national power, especially military power. Other factors like the size of a country’s population and geography become much more decisive in the realm of great power competition, particularly if a government is capable of mobilizing a greater percentage of its citizens’ resources for use in national projects like the armed forces. China may therefore remain relatively poorer than the U.S. for decades, and still best America in geopolitical competition over the Asia-Pacific.