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Is the US Ready To Be Number Two?

In 1980, the US economy was more than 10 times larger than China’s, yet by 2017, China with its rapid growth could have the largest share of global GDP, more than 18 percent, according to International Monetary Fund projections. US leaders have not prepared their citizens for this “great convergence,” suggests Kishore Mahbubani, author and dean of Lee Kuan Yew School of Public Policy. Still, much of the world has pivoted toward US values and standards. Education, science and technology have united the world around some best practices. Cooperation is still needed on global challenges like climate change, Mahbubani argues, and a system of global governance, would be useful. Principles of democracy, recognition of power balances and the rule of law should guide any systems of global governance, he writes. This era of convergence may be best suited for adjusting old systems or building new ones. – YaleGlobal

Is the US Ready To Be Number Two?

US leaders dare not admit it, but China’s poised to become the largest economy
Kishore Mahbubani
YaleGlobal, 11 February 2013
Top dog no more: President Bill Clinton's speech at Yale in 2003 warned that the US may not stay a preeminent world superpower (top);  China's export machine helped move it to the top

SINGAPORE: Long before anyone did, former US president Bill Clinton saw that America would have to prepare for the time when it would no longer be the number one power in the world. In his 2003 Yale University address on “Global Challenges,” he said:

If you believe that maintaining power and control and absolute freedom of movement and sovereignty is important to your country’s future, there’s nothing inconsistent in that [the US continuing to behaving unilaterally]. [The US is] the biggest, most powerful country in the world now. . . . But if you believe that we should be trying to create a world with rules and partnerships and habits of behavior that we would like to live in when we’re no longer the military political economic superpower in the world, then you wouldn’t do that. It just depends on what you believe.

Long before 2003, Clinton wanted to begin preparing Americans for this new world. “Clinton believed […] what we had in the wake of the cold war was a multilateral moment – an opportunity to shape the world through our active leadership of the institutions Clinton admired and [Charles] Krauthammer disdained,” writes Strobe Talbott, former deputy secretary of state in his book The Great Experiment: The Story of Ancient Empires, Modern States, and the Quest for a Global Nation. “But Clinton kept that belief largely to himself while he was in office…. political instincts told him it would be inviting trouble to suggest that the sun would someday set on American preeminence.”

Few Americans dare suggest that their economy may drop to 2nd place. At a Davos panel, none could acknowledge this publically.

Sadly, few Americans have heeded Clinton’s wisdom. Few dare to mention that America could well be number two. I discovered this when I chaired a panel on “the future of American power” at the 2012 World Economic Forum in Davos. After citing projections that America would have the second largest economy in just a few years, I asked the American panelists – two senators, a congresswoman and a former deputy national security advisor – whether Americans are ready to become number two. To my shock, none could acknowledge publically this possibility.

America may well become number two faster than anyone has anticipated. According to the most recent International Monetary Fund (IMF) projections, China will have larger share of global GDP than the United States by 2017. In 1980, in PPP terms, the US share of the global economy was 25 percent, while China’s was 2.2 percent. By 2017, the US share will decline to 17.9 percent, and China’s will rise to 18.3 percent.

Even if America becomes number two, we will still have a better world. In many ways, the world is “converging” to American values and standards, as I explain in The Great Convergence. The global middle class is booming, interstate war is waning, and never before have people traveled and communicated across the world so easily. These changes are creating common values and norms across the world. Education and scientific reasoning, for example, are enabling people the world over to speak with a common language.

We still have a better world. In many ways, the world is “converging” to American values and standards.

However, while humanity is well on its way to combating absolute poverty and interstate warfare, other problems are surfacing. Preventing and curtailing transnational issues like climate change, human and drug trafficking, and financial crises require cooperation among nation states, yet this is not happening. A simple analogy illustrates this. Before the era of modern globalization, humankind was like a flotilla of more than 100 separate boats in their separate countries. The world needed a set of rules then to ensure that the many boats did not collide and facilitate their cooperation on the high seas if they chose to do so. The 1945 rules-based order strived to do this, and despite some obvious failures, it succeeded in producing a relatively stable global order for more than 50 years.

Today, the 7 billion people who inhabit planet earth no longer live in more than 100 separate boats. Instead, they live in 193 separate cabins on the same boat. But this boat has a problem. It has 193 captains and crews, each claiming exclusive responsibility for one cabin. No captain or crew cares for the boat as a whole. The world is now sailing into increasingly turbulent waters with no captain or crew at the helm.

The Great Convergence echoes the themes of Clinton’s 2003 Yale speech. It’s in the interest of all – particularly great powers – to strengthen institutions of global governance so that we’re not sailing blindly into choppy waters without a captain. The National Intelligence Council recently projected that in 2030 Asia would overtake the Western world economically, technologically and militarily. When China becomes a world superpower in a matter of decades, the United States and Europe will want to ensure that China plays by the rules.

It’s in the interest of all – particularly great powers – to strengthen institutions of global governance.

But in order to make international organizations like the United Nations, the IMF and the World Bank more credible and effective, they must undergo serious reform. It is manifestly absurd that the West makes up 12 percent of the world’s population but takes up 60 percent of UN Security Council permanent seats. It’s nonsensical that the head of the IMF is always a European and the head of the World Bank is always an American as the West’s share of global GDP diminishes every year. This concentration of clout in the hands of a relative few has grave implications for these institutions’ effectiveness and independence, making them instruments of the West.

No other organization, not even huge global NGOs like the Bill and Melinda Gates Foundation or the Clinton Foundation, has the scope and legitimacy that the UN currently enjoys. For example, the United States for years has been trying to pressure China to take a more proactive role in fighting climate change. Predictably, China has resisted these pressures because they saw them as a clever yet transparent American ruse to curtail Chinese economic growth. Only when the United Nations Development Programme raised the issue with China did the Chinese government take heed, as the UNDP is seen as a neutral party in China. The UN and its many agencies may soon lose invaluable credibility if the West insists on monopolizing its power over these institutions.

Any reform of the UN should take into account three principles: democracy, recognition of power balances and the rule of law. Institutions of global governance can be made more democratic by ensuring that their leadership accurately reflects the composition of world’s population. At the same time, we must also take into account geopolitical relationships among emerging and middle powers. Finally, the rule of law is essential to the mediation and resolution of thorny international issues and to governing the conduct of states on the international stage so as to prevent escalation of conflict.

In this rapidly changing world, it’s a mistake to allow institutions of global governance to stay as they are. The 1945 rules-based order is no longer appropriate for 21st century circumstances. Global leaders must better prepare us for the challenges to come and equip our international organizations to deal with them. Leaders must find the courage to continue advocating for stronger multilateral cooperation. It is time for our captains and crews to emerge from their cabins and start steering the boat.
 

Kishore Mahbubani is dean of the Lee Kuan Yew School of Public Policy, NUS, and author of the forthcoming book The Great Convergence: Asia, the West, and the Logic of One World. Click here for an excerpt.

Rights:Copyright © 2013 Yale Center for the Study of Globalization

Comments on this Article

18 February 2013
Excellent summary of the challenges that lie ahead for the US and the other Western nations. In particular, I was fascinated by the observation that Western values have become the 'norm'.
A period of adjustment is certainly inevitable, which means that global institutions must certainly be reformed if they are to reflect shifts in population and economic power. At the risk of sounding pessimistic, I would go as far as to say that failure to reform such bodies as the UN and the IMF could lead to serious environmental and even military conflicts further down the line.
However, I agree with the comment by Yoshimichi Moriyama (above): bigger is not necessarily better. The fact of the matter is that China faces huge problems:
-> China has built its boom on a low-wage workforce, which is an advantage that even now is being eroded by other low-cost countries
-> China faces a huge bill to pay the cost of a massive environmental cleanup
-> China has a rapidly ageing population
-> There are huge social and economic divisions between the rural poor and the urban rich
-> It has an inflexible currency policy, which has helped create massive trade imbalances
So to conclude, the idea that China will inevitably become a global superpower may well turn out to be the stuff of myth and legend. It would require a 'China Spring' to create the reforms necessary to solve its growing catalogue of problems. But can you honestly see that happening in the near future?
-Bill Harpley , Brighton (U.K.)
14 February 2013
Is the size of an economy everything for ranking countries? I do not think that a boxer of 100 kilograms is more powerfut than one of 99 kilograms because he is heavier. I agree that the present make-up of the security council of the UN does not well represent member-nations, but I do not think the size of population should be the only criterion. France was no longer a big power since it was defeated by Germany in 1871 but Charles de Gaull tried to maintain the image of glorious France by saying no to the policy of the United States. Just like that, China has cultivated the techinique to make it look larger than it really is. The fact is that China is not leading world economy. Its economy has been parasitic on world economy. Its economic growth comes mainly from its low wage and unsatiated demand.
-Yoshimichi Moriyama , Unnan City, Japan
12 February 2013
You misspelled Singapore in the dateline.
Thank you - YaleGlobal regrets the error.
-Lin , Jakarta
11 February 2013
Excellent article. Yes. China is advancing in all fronts. The Fact that China occupies Number one position in Wind Energy surpassing USA shows the emerging economy of China. BRIC Countries are also advancing much. In Asia China,Taiwan and Korea are fast developing countries.
Dr.A.Jagadeesh Nellore(AP),India
E-mail: anumakonda.jagadeesh@gmail.com
-Anumakonda , Nellore(AP),India