Jan 182019

Will we live in a unipolar world dominated by China in 20 or 30 years? Not likely, says Columbia University professor Jeffrey Sachs.

Writing in the Financial Times, Sachs notes that China’s economy, already larger than that of the U.S. measured at international prices (what is called purchasing-power parity), will be much larger than the American economy simply because there are so many more Chinese. Chinese outnumber Americans by more than four to one.

But neither country will have economic primacy, he writes. For one, China is now, and is likely to remain, a relatively poor country by global standards. World Bank data put U.S. gross domestic product per head at a bit less than $60,000 in 2017 dollars. The comparable figure for China: about $8,800.

And because of China’s disastrous one-child policy, its share of global population is likely to fall by half by 2100, to about 9% from 18%. Its median age, currently about 37 years, will soar to 48 by 2050.

Sachs writes that China’s population, currently just under 1.4 billion, will shrink by 400 million by 2100. The Chinese Academy of Social Sciences has guessed that population will begin declining as soon as 2027. With a shrinking population and rising median age, writes Sachs, China will be “more senior citizen than world conqueror.”

That doesn’t mean that China won’t be a potent competitor. China is converging or even ahead of the U.S. “on technologies such as 5G.” Sachs bets that in the 2020s, China will compete with Boeing and Airbus by successfully producing commercial airliners.

Donald Trump’s trade war against China is unlikely to succeed, Sachs writes. The U.S. is trying to “contain” China by pushing allies to stop buying Chinese high-tech equipment (e.g., 5G network equipment) and discouraging or prohibiting Chinese acquisitions of technology firms. Hawks in the administration want to bring Chinese to its knees in a replay of the collapse of an earlier rival, the Soviet Union. But Sach writes that

China will not crumble as the Soviet Union did. Its technology and industrial bases are far too strong and its economic and diplomatic links around the world far too deep. Nor will it bow to US threats. Unlike Japan, China is not part of the American security umbrella, and not dependent on US goodwill. China’s products around the world sell because they are high quality, less costly, and often cutting edge.

Sachs is worried about the “rising global costs” of today’s trade brinksmanship. Business investment is increasingly stymied by uncertainty. The trade war risks turning 2018’s synchronized global growth into a synchronized global slowdown this year and next. Concludes Sachs in his Financial Times op-ed,

If ever there were a time for China to make some clear commitments on intellectual property and market access, and for Mr Trump to declare a great success and move on, it is now.

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