Saleha Ahmed
On June 3, the highly influential American political scientist, international relations scholar and University Distinguished Service Professor at Harvard University Joseph Nye came to speak in a joint event hosted by the Oxford IRSoc and the Oxford Martin School, to discuss the topic of his most recent book titled “Is the American Century Over?” and to answer one of the most pressing issues of IR today: will China pass the U.S. by 2030? Throughout his talk, he gave compelling reasons as to why he believed that China will not surpass the U.S., despite the concern of many Americans that it will. Nye mentions that in one U.S. poll, about fifty percent of the American people believe that China has passed or would soon pass the U.S. in overall power. But, Nye explains, in order to make accurate policy choices, it is essential to have a correct assessment of the relative strengths of the different powers that are China and the U.S. instead of being guided by fear. Especially after the Great Recession in 2008, and as China put forth its stimulus package to keep its growth rate at 10%, many Americans believed that the U.S. was in a decline while China was on the rise. However, even though the Great Recession represented a relative decline, it did not mean that the country was (or is) experiencing an absolute decline. He attempts to support his argument by explaining why the U.S. is leading (and will lead in the future) in terms of military power, economic power and soft power.
Nye addresses a packed house
Nye discusses the comparison that is made by many that the U.S. situation is similar to that on Ancient Rome. To compare the gridlock in the American political system and the issues facing the American economy to the decline of Ancient Rome would be a ”misuse of history” according to Nye, because the American economy does not have much resemblance to the Ancient Roman economy. The U.S. leads on many aspects of the economy including its demographic health, energy, technology, and education structure. In terms of the U.S. demography, Nye insists that the country has healthy statistics, with it being ranked third in the world in terms of the size of the population. By 2050, UN demographers project that the U.S. will maintain its position. Energy-wise, contrary to the belief of many, the U.S. is not becoming increasingly dependent on imported energy. Nye points to the projections made by the International Energy agency, which projects that by the 2020s, North America will not be importing any energy because of the technological innovation that is currently being advanced, including horizontal drilling and hydraulic fracturing. Furthermore, other types of technological advances will be key to further growth in the 21st century and the U.S. is in the lead in terms of biotechnology, nanotechnology and information technology. The U.S. is also highly ranked in terms of higher education. Because of all these reasons, Nye believes that the U.S. is highly dissimilar to Ancient Rome because it is not experiencing an absolute decline and this analogy is merely used by many as a rhetorical tool to express frustration over the political gridlock in America.
The U.S. is, however, in a relative decline, which sometimes misleads people into thinking that it will eventually be overshadowed by China. Indeed, the U.S. share of the world economy will be decreasing as other countries such as China, India, Brazil and Indonesia (amongst other countries) have a greater share in it. The U.S. had between approximately a 25%-50% share in the world economy at different times during the 20st century, whereas the IMF predicts that in 2020, the U.S. will have about a 17-18% share. While this is still a significant share, it means that the U.S. may not be as dominant as it once was because of the greater amount of countries that will have power and participate in the world economy. The greater issue with the “rise of the rest” is dealing with entropy and trying to produce enough collective goods because of the free rider problem leading to underproduction. One of the main issues with the relative decline of the U.S. is that China will become a free rider as the U.S. was in the ‘20s and ‘30s after World War I. The challenge will be for China and the U.S. (and other countries) to work together to address collective issues in the international system, such as climate change, international monetary stability and countering terrorism.
Besides overstating the decline of the U.S., there is also the problem of aggrandizing Chinese power, according to Nye. Even though China has had a good economic record for the past 30 years, it is important not to see that straight line and “extrapolate it indefinitely into the future”. He mentions the work of his fellow colleagues at Harvard-- economists who have studied the patterns of countries who have also had double digit growth, where the norm is to have a “regression to the mean”. This means that China’s projection for growth in the next 10 years would go down from its current 7% to approximately 3.9%. Even though it is difficult to predict the future, it is also not wise, according to Nye, to assume that China will keep going upwards based on its current economic situation. And even if China is to have a larger economy than the U.S. by 2030, this does not mean that China will be more economically powerful than the U.S., since market size is only one aspect of economic power. What is also important is per capita income, since that “measures the sophistication of the economy”. China’s per capita income, Nye argues, will not be equal to the U.S. in 2030. Much of China’s trade also has a low value added, and Nye gives the example of the iPhone import from China, where most of the elements of the product come from other countries and thus results in only a small percentage of profit going towards its economy. The U.S., on the other hand, has much more sophistication in its economy. Additionally, it is leading in terms of military power and soft power.
Nye with Daniel Bayliss (Left- President) and Rupert Yorke (Right- SIR Editor)
The pressing challenge that both China and the U.S. have to face in the near future is to work together in order to prevent a period of entropy and to avoid the free rider problem. As China’s capability increases, it must take part in solving collective and international issues. Even though there will be both “competitive” and “cooperative” aspects to the relationship between China and the U.S., the latter should not be too preoccupied with the competitive aspects and instead focus its attentions towards working together with China and other countries. Nye contends that it is most definitely not the end of the American century and that the U.S. should not feel too threatened by the prospects of China’s growth. As Nye says, “China is not likely to overthrow the [global] system [comprising of the IMF, WTO, UN, etc.] as much as increase their role in it.”
Nye's full address and Q&A