In the context of exploring the transformations within the international system and the positions of major powers, Future Center for Advanced Research and Studies hosted a panel discussion titled "Geoeconomic Competition between the United States and China: A European Perspective." The discussion featured Hamish McRae, a British journalist and writer specializing in financial and economic affairs. McRae is the former economic editor of prominent British newspapers such as The Independent and The Guardian, and the author of the book "The World in 2050: How to Think About the Future?" which was recently translated and published by the Future Center.
During the panel discussion, McRae highlighted several key points regarding the globalized international economy:
1- The fragility of globalization: While there are signs of the international system becoming fragmented and globalization eroding, it is important to recognize that globalization operates through mechanisms akin to the forces of nature and the laws of gravity. McRae supported this assessment by referencing the statements of former United Nations Secretary-General, Kofi Annan, and renowned Chinese businessman, Jack Ma. Both emphasized the necessity of continued growth in the forces of globalization. Disruption of trade and economic transactions between countries would inevitably lead to conflict. The World Trade Organization and UNCTAD have stated that global trade has consistently increased since 1870, with declines only occurring during periods of world wars. Although global trade reached its peak in the early 2000s and has since declined, this decline is not comparable to the extent witnessed during World War II and is not expected to reach such levels again.
2- The economic competition between China and the United States: McRae emphasized the importance of understanding this competition in the context of the historical distribution of international powers' share of the global economy. He pointed out that India was the largest economic power in the world at the beginning of the second millennium, and that the Indian and Chinese economies were equal in size at the beginning of the sixteenth century, whereas the United States' dominance of the global economic scene only began after World War II. According to estimates, by 2050, McRae points out that China's share of the global economy will reach about 23%, surpassing the United States by a mere 1%. In contrast, India's share of the world economy is projected to remain below 10% at that time. For China, its economic rise is seen as a return to its previous status. However, for the United States, this rise represents a challenge to its economic dominance of the world.
3- A European decline: Europe's decline in the global economy is expected to continue due to several factors. Firstly, the aging and declining population, along with the lack of a unified European trade position, contribute to this decline. Additionally, the differing priorities of European powers further exacerbate the situation. Beijing is capitalizing on these divisions to strengthen its economic presence on the continent and discourage European countries from forming economic and geopolitical alliances with Washington. The United Kingdom, which has close ties with the United States and recently left the European Union through the "Brexit" agreement, has yet to fully grasp the opportunities and challenges presented by the Chinese-American competition.
If the current Sino-American rivalry escalates into a trade war or a clear geoeconomic conflict, Europe will inevitably align itself with the United States. However, there will be nuanced differences between the European and American positions. Europe will be eager to explore avenues for international cooperation. Therefore, the current actions of European powers involve maintaining cooperation with both sides while reassessing China's intentions. This includes evaluating whether China intends to prioritize trade and joint cooperation or is moving towards engaging in trade wars.
4- Evaluating China’s economic strength: In addition to re-evaluating its intentions, Beijing should also assess the seriousness of the Chinese threat. According to McRae, China may currently seem to be on the rise in terms of numbers and could potentially surpass the United States as the world's largest economy. However, it faces a significant challenge in the form of demographic distortions. Chinese society is aging, which poses challenges for its growth plans. These challenges include providing the necessary labor for growth and employment, focusing on an economy that supports older age groups, and restructuring the economy to prioritize services for the middle class instead of the growth-oriented mass production model. In contrast, the United States benefits from demographic vitality due to its continued attractiveness as a destination for global migration, unlike China. Therefore, the most likely scenario is that the United States will regain its position as the leader of the global economy in the coming decades, following a brief decline.
In his assessment of the Chinese economy, McRae highlights its significance for the global economy. China's abundance of natural resources and renewable energy sources further contribute to its importance. While Beijing has made notable progress in advanced digital and biotechnology sectors, it has yet to establish itself as a leading country in the service economy. This is crucial considering the demographic shift towards the middle class.
China is currently in competition with the United States in the field of artificial intelligence, having developed some impressive technologies. However, it has not yet reached the stage of innovation. One major obstacle for China is its struggle to attract labor migration and advanced technical expertise. Consequently, McRae argues that China's growth is unsustainable, making it difficult to achieve a transition on multiple levels or mobilize the necessary resources to build a welfare economy.
At the same time, the current and future leadership of the Chinese Communist Party faces challenges in retreating from its growth and expansion ambitions. This may lead to unexpected transformations and difficulties in the next decade. It is crucial for China to navigate this period without entering into internal or external conflicts that hinder continued growth.
At the conclusion of the panel discussion, McRae emphasized that the above does not imply that the United States will have an easy path to consolidate its hegemony. Washington is currently grappling with real and deep crises that threaten its internal cohesion. American domestic politics have become completely and severely polarized between the left and the right. Reaching a consensus on the future has become increasingly challenging. This situation heightens the likelihood of the rise of populists like Donald Trump, who may once again return to the White House in the November 2024 elections. Therefore, in order for the United States to maintain its leading economic position in the world, it will need to exert greater efforts to preserve its internal cohesion, overcome polarization, and sustain societal vitality.
