Tom Plate :
ONE OF the sillier and least useful quarrels in world economics these days is whether China or the United States has the larger economy. The question is like having two huge elephants looking about the same size and weight getting on the bathroom scale to weigh themselves down to the last comparative ounce. And pity the poor bathroom scale, eh?
For a further laugh, take a look at who’s asserting what. Rather than denying it has become the number two economy, many US experts are agreeing that China is number one. But not China: rather than proudly claiming the top spot, many of its officials experts are insisting that the US is still in first place because of this statistical reason or for that.
The reality behind these perspectives is that China gains some trade benefits by presenting itself in trade talks as a still relatively poor Third World economy. By many measures this is technically accurate (it is far more poor than rich, and as it has the world’s most populous nation, this is no joking matter). But with each successful economic year its assertions becomes less believable even as they remain statistically true.
As for the US, it is extremely helpful to the anti-China crowd aiming to sell military containment as the best China policy to be able to overstate or at least dramatise Beijing’s roaring economic growth. And I mean … roaring! Remember the great fear in the eighties about Tokyo? That the booming Japanese economy would soon take over the world? Now we have a new Asian peril from across the Pacific.
I actually am rooting for Beijing to sell the China as number two arguments because it will help feed its many hundreds of millions of un-wealthy. I don’t like seeing people starving or hungry, whether Communist or capitalist.
The reality, though, is that reports of the demise of Chinese economic growth are at best premature. As investment economist Kenneth Courtis, one of my favourite Asia watchers puts it: “Has the world gone completely mad? A 7.4 per cent growth for a USD 11 trillion economy is not bad. And it represents about 40 per cent of total world growth in 2014! Plus as China’s trade surplus has crumbled from 10.6 per cent of GDP to 2.5 per cent over the last six years, it is exporting vast amounts of growth to the region. If you take the direct growth of the domestic economy and the growth China is providing to the rest of the world, through its falling trade surplus, I estimate that about 60 per cent of world growth in 2014 was China driven….”
So we suggest that rather than fighting over whose tusk is the bigger, instead we agree that there is an Asian elephant and a North American elephant, and right now they are the two biggest animals in the jungle, by far. Viewed in this colourful way, the question then becomes not who’s got biggest but who’s got the smartest perspective: Might both be smart enough to realise it’s a huge global jungle out there and the challenge is how they are going to navigate all the danger without adding to it with foolish bilateral policy.
One way to go wrong would be to paint each other not as wise elephants but as giant piranhas with razor teeth aching to take bite out of the other up. This attitude of course would provide the emotion for the next big war in the Pacific. But looking at everything logically, China and the United States really have no irreconcilable differences as long as each side gives the other room to breath, as long as each is not adamant about getting every issue, dispute and differences its own way, and as long as its inner angels get the better of its ideological devils who wish the worst for the other.
Over time, China’s rise, if all goes reasonably as expected, will make it predominant in Asia, its enthusiasms kept from excess by India and Japan in mutual wariness. And the US, while staying put in the Pacific and reassuring Japan’s nonnuclear nerves, will remain predominant in North America. But note that China, for its part, declines the option of pesky patrolling off America’s West Coast even as the US hovers constantly and annoyingly over China’s East Coast.
If the Sino-US environment in the Pacific turns out to resemble something approximately this sensible, then the hard part for Washington and China will be the bilateral relationship itself. How low can it be allowed to sink; how high might it be maneuvered to soar? Factors within each nation will determine that, not the political environment of Asia itself. Thus the most dangerous enemies of peace between Beijing and Washington are within China and the US themselves.
(Tom Plate is a distinguished professor and journalist based in Los Angeles)
