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Letter to Obama’s Successor: Governing An America That’s Number 2

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The Debate

Letter to Obama’s Successor: Governing An America That’s Number 2

The next president will likely preside over China becoming the world’s largest economy. Here’s what to do.

January 20, 2017

Dear Mr./Ms. President:

Each of your predecessors has had to confront crises, at home and abroad, and, especially in the last third of our nation’s history, each has had to respond to events and trends abroad that could affect vital interests.  You will doubtless have to do so as well. 

Few of your predecessors, however, have been called upon to respond to a real or perceived transformation of the international system. The end of the Second World War was one such transformation; the end of the Cold War, another.  A third is likely to occur on your watch: at current prices and market exchange rates, China’s economy will overtake America’s in absolute terms before the end of this decade.  

Characterizing this transition as “transformational” may seem exaggerated in light of some of the oft-discussed realities, such as:

— China’s per-capita income is less than a quarter of America’s;

— Rapid aging and environmental degradation will increasingly challenge the foundations of China’s growth;

— Developments in natural gas, big data, three-dimensional printing, and numerous other fields—coupled with a demographic profile that is enviable among great powers—suggest a promising future for the U.S. economy;

— America’s system of higher education and entrepreneurial spirit allow it to continue attracting the largest share of global talent; and

— The dollar remains the world’s reserve currency.

— America’s comprehensive economic power will exceed China’s well after the latter’s gross domestic product (GDP) moves into first place.

One might question how disruptive an event can be if it has been speculated about incessantly for the preceding decade or two.  As far back as 2008, 40 percent of Americans believed that China was the world’s leading economic power; three years later, that figure had risen to 52 percent. 

Back then, however, analyses of these assessments invariably contained correctives. When the actual transition occurs, however, and “CHINA OVERTAKES THE U.S. AS THE WORLD’S LARGEST ECONOMY” goes viral, the psychological impact on Americans, policymakers and citizens alike, is certain to be significant.

With the possible exception of military spending, no figure is more closely associated with power than GDP.  Depending on when one estimates the U.S. to have become the world’s largest economy, it has held that title for between 120 and 150 years.  True, Americans would be concerned about losing this title no matter which country inherited it.  To cede it to China, however—a country that only 50 years ago was poor, isolated, and mired in chaos; and whose core values and strategic imperatives are often fundamentally different from America’s—will make the loss all the more disconcerting.  Those who hailed the 2008/2009 financial crisis as evidence that the U.S. is in systemic decline will no doubt declare that China’s number-one GDP ranking has vindicated their argument.

Now fast forward to 2019 when the transition is likely to occur.  What should you say to reassure an American public that will be looking to you for reassurance and vision in equal measure?  Let’s start with two types of messages that you should avoid:

— “Don’t worry.  The U.S. will reclaim its position as the world’s largest economy.” This promise is mathematically impossible so long as China’s growth rate exceeds America’s. With a population many times that of the U.S., a reasonably governed China is likely to retain this top spot.

— “We met the Soviet challenge. We can meet the China challenge as well.”  The more China’s comprehensive national power grows, the more the U.S. would lose by undertaking to contain it.  Furthermore, even if done for rhetorical effect, this juxtaposition suggests a dangerous equivalence: whereas the Soviet Union was an implacable antagonist, China is a partner-cum-competitor.  Whereas the U.S. sought the eventual collapse of Soviet power, the U.S. has nothing to gain—and quite a lot to lose—from a weak China.   

Nor will it suffice to assure Americans that “America is the greatest country in the world.”  In response to such a clear demonstration that the center of geopolitical gravity is shifting away from the U.S. (and the West, more generally), exceptionalist declarations of this kind could make you sound disconnected from reality, even insouciant, unless you follow them up with a concrete plan of action.    

Instead, you should take a cue from the British wartime slogan: “Keep calm and carry on.”  The U.S. economy has core strengths that remain unrivaled.  China’s extraordinary achievement should motivate the U.S., not depress it.  I’d recommend delivering a primetime address in which you:

— Discuss what lessons the U.S. can distill from China’s explosive growth that might be relevant to our nation’s path going forward;

— Identify opportunities for the U.S. and China to increase their economic interdependence;

— Explain how you to intend to realize gains from the fields mentioned above (e.g., natural gas) to create jobs and stimulate growth;

— Present a series of initiatives for attracting and retaining foreign talent and nurturing small-business growth and;

— Unveil a series of government competitions that reward the most promising citizen proposals for reining in America’s debt and addressing other structural economic challenges that confront our nation.    

There’s no reason for China’s progress to constrain America’s.  Indeed, if the U.S. responds to this transition with the creativity and dynamism for which it has long been admired, there’s no reason why it can’t continue to anchor the global economy.  If it can do so in partnership with China; then all the better—for Americans, for Chinese, and for our world. 

Ali Wyne is an associate of the Harvard Kennedy School’s Belfer Center for Science and International Affairs and a contributing analyst at Wikistrat.  He is a coauthor of Lee Kuan Yew: The Grand Master’s Insights on China, the United States, and the World (Cambridge, MA: MIT Press, 2013).