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Peak China?

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Peak China?

Joseph S. Nye, Jr, a professor at Harvard University and a former US assistant secretary of defence, in a column for the Australian Strategic Policy Institute questions if the world has witnessed ‘peak China’ given the failure of China’s Zero-COVID policy and the prediction of some experts that China’s economy will not overtake the US by 2030 as many had expected.

In offering his assessment, Professor Nye states that “China remains well behind the US on military and soft-power indices.” He is of the view that China’s heavy investment in its soft power have not been as effective because of Beijing’s territorial conflicts with many of its neighbours and the absence of a vibrant civil society in China. However, the author does concede China’s economic reach. “The US was once the world’s largest trading power and bilateral lender. But now, nearly 100 countries count China as their largest trading partner, while only 57 have such a relationship with the US. China has lent US$1 trillion for infrastructure projects through its Belt and Road Initiative over the past decade, while the US has cut back aid.”

In assessing the overall balance of power, the author argues the US has five long-term advantages. First is geography as the US has two oceans and two friendly neighbors whereas China shares a border with 14 other countries. The US has energy independence and has become a net exporter whereas China is dependent on imports. “Third, the US derives unrivalled financial power from its large transnational financial institutions and the international role of the dollar.” Fourth, the US has a demographic advantage with an expanding workforce whereas China’s working-age population peaked in 2014. In fact China has entered an “era of negative population growth.” Lastly, America has been at the forefront in the development of key technologies (bio, nano and information) that are central to this century’s economic growth.

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