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The U.S. is still regarded as the top economic power, even more so than last year, but most people around the world continue to believe that China either will eventually replace or already has replaced the U.S. as the world’s leading superpower. A median of half across the countries surveyed say that the U.S. is the world’s leading economic power, while only 27% say that of China. While a median of only 14% say China has already replaced the U.S. as the top superpower, majorities or pluralities in 27 of 40 countries say China will eventually become or has already replaced the U.S. as the top superpower.
The economic dynamism generated by democratic capitalism is a key element of the American Project’s persuasive power. But there are other models, such as China’s state-directed capitalism conjoined with an authoritarian state. Years of very fast Chinese growth and relative US stagnation have made China look like the strong horse to many — especially those not-so-interested in democracy. “I have seen the future, and it’s capitalism with Chinese characteristics!” The Beijing Consensus. As the Economist put it back in 2011:
Too many people—not just third-world dictators but Western business tycoons—have fallen for the Beijing consensus, the idea that state-directed capitalism and tight political control are the elixir of growth. In fact China has surged forward mainly where the state has stood back. “Capitalism with Chinese characteristics” works because of the capitalism, not the characteristics.
But now China is slowing, perhaps sharply. And while the US path to dynamism means rediscovering and returning to its strengths, China must do what it has never done before. AEI’s Derek Scissors on the challenge:
In 1978, China began to grant limited private property rights and to permit limited competition. These steps helped create an economic miracle, among other things lifting 850 million people out of poverty over a generation. But for more than a decade now, the Communist Party has chosen not to move forward on private property rights and competition, instead emphasizing an unprecedented amount of state-directed spending. The result is a severely damaged environment, an unbalanced economy, and a painful debt burden.
This is not hindsight. The stagnation path was visible six years ago, when China chose to massively expand credit in response to the financial crisis. Weaknesses in the economy can be traced back to policies initiated six years before that, in 2003. Because the fault lines have been developing for some time, they will require years of difficult reform to address. The current government has pledged such reform but largely lacked the nerve to initiate it, much less sustain it. The single most likely result is that China will share the fate of many other economies and fall far short of being wealthy.
So the good news about “bamboo capitalism” is that if it does transform China into a dynamic, innovative economy with a high degree of competitive intensity, it means China itself has probably adopted a lot more of the economic freedoms that American prosperity is built upon. We’ll see what those surveys say five or 10 years from now.