China and US Battle For Influence in Pakistan

[Riaz Haq]

Top US and Chinese diplomats have visited Pakistan to meet with the country's new prime minister Mr. Imran Khan within days of his assuming office. The US Secretary of State Mike Pompeo was the first to call on Prime Minister Imran Khan in Islamabad. Pompeo's visit was soon followed by a three-day visit by Chinese Foreign Minister Wang Yi. What is at stake in the battle between China and the United States in Pakistan is the prize of global superpower status, according to the US-based Wall Street Journal.

There is a lot of speculation in the western media about the objectives of Pakistan policies being pursued by the two great powers and their impact on the US-China competition for world dominance. Such speculations have centered on the debt related to China-Pakistan Economic Corridor (CPEC) and the US leverage in potential IMF bailout of Pakistan.

American business publication Wall Street Journal has produced a short video explaining how its staff sees what it describes as "US-China conflict brewing in Pakistan". What is at stake in the battle between China and the United States in Pakistan is the prize of global superpower status. Here are the key points it makes:

1. The US-China conflict brewing in Pakistan is about global dominance sought by the two great powers.

2. If China succeeds, it could become the new center of global trade. If the US wins, it could frustrate China's push to become a global power. The impact of it will be felt around the world for decades.

3. China has already surpassed the United States as the world's biggest exporter of goods and services.

4. The biggest project in China's Belt and Road Initiative (BRI) is China-Pakistan Economic Corridor (CPEC) in which China is investing heavily and providing massive loans.

5. China could use the infrastructure built in Pakistan under CPEC to gain access to the Indian Ocean and supplant the United States in Pakistan.

6. CPEC-related spending is sinking Pakistan deeper in debt to China. It could force Pakistan to seek $8 billion to $12 billion bailout by IMF where US is the biggest shareholder with veto power.

7. US does not want the IMF bailout money to be used to repay Chinese debt. Not bailing out Pakistan is not an option because it could cost US an important ally in the region.

8. US could, however, use IMF bailout to limit what Pakistan can borrow from China. Such a condition will achieve the US objective of significantly slowing down CPEC and BRI.

9. Pakistan's dilemma is that it needs both the infrastructure improvements financed by China and the IMF bailout to ease pressure on its dwindling foreign exchange reserves.

10. Whoever wins in Pakistan will become the number one global superpower.

Can US "Spend Them (Chinese) Into Oblivion"?

Here's the Wall Street Journal video:

https://youtu.be/wvw-85CC1t4

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[Riaz Haq]

How #UnitedStates Should Deal With #China in #Pakistan. #US would be better off grappling with complexity of the challenge posed by China’s growing influence especially in the context of #India-Pakistan regional stability. #CPEC https://carnegieendowment.org/2020/04/08/how-united-states-should-d... via @MarkeyDaniel

U.S. policymakers are correct to sense that under CPEC’s surface lies a degree of frustration, uncertainty, and reduced ambition in both Islamabad and Beijing. Even if Trump administration officials only aim to give voice to concerns quietly shared by many Pakistanis, however, Washington’s approach has been too heavy-handed, tone deaf to the political and diplomatic exigencies facing Pakistan’s civilian and military leaders.

Moving forward, Washington’s policy should take two ground realities into account. First, Pakistani leaders—like those across Asia—have no particular desire to take a side in the brewing geopolitical competition between the United States and China. Self-interested more than ideological, they would prefer to extract benefits from both Beijing and Washington, even to play them off of each other. Moreover, many Pakistanis tend to question U.S. motivations, doubting Washington’s noble, liberal rhetoric about freedom and assuming those words mask ulterior aims, from safeguarding commercial and security interests to practicing outright imperialism. To be sure, Chinese rhetoric about noninterference in the sovereign affairs of other states strains credulity for many Pakistanis, but in the aftermath of a terribly fraught two decades of dealing with the United States, Washington’s claims of beneficence ring equally hollow.

Second, U.S. policymakers should keep in mind that CPEC is only one slice of the China-Pakistan relationship. Moreover, different infrastructure projects are likely to have different political consequences. Rather than framing the U.S. policy response as a narrow competition over the commercial and economic issues of “cost, debt, transparency, and jobs,” U.S. policymakers should train their focus on three broader aspects of China’s relationship with Pakistan.

The first and most immediate concern should be with respect to China’s impact on regional stability, especially between India and Pakistan, but also in the context of U.S. plans for a complete military withdrawal from Afghanistan. Second, now and for the foreseeable future, Washington should come up with more effective ways to compete with Beijing’s growing political influence, including its role in strengthening repressive, illiberal governance in Pakistan. Third, over the long run, the United States will want to weigh the geopolitical implications of the China-Pakistan defense partnership, including how China’s presence in Pakistan will better enable it to project military power into South Asia and the Middle East.

REGIONAL STABILITY
Over the past year, India and Pakistan have again reached the brink of war. Another India-Pakistan military crisis may be brewing this summer. Even as Trump administration officials perceive China as a global competitor, they would also be smart to appreciate Beijing’s role as a potential diplomatic partner when it comes to restraining India and Pakistan from war. If tensions in China-U.S. relations inhibit cooperation in the midst of a South Asian crisis, all sides will lose.

At present, U.S. and Chinese officials appear to hold different views on how to assign responsibility (and blame) for tensions between New Delhi and Islamabad......

[Riaz Haq]

#Pakistan moves to save face as #coronavirus hits Belt and Road. "The world....will be a different place by the time the pandemic is over. Investment flows will shrink, and China will be one of the very few countries with available capital" #China #CPEC https://asia.nikkei.com/Spotlight/Belt-and-Road/Pakistan-moves-to-s...

The government of Pakistan has ordered the resumption of all infrastructure and energy projects that are part of China's Belt and Road Initiative, but experts believe the move is a matter of face-saving.

Work on the China-Pakistan Economic Corridor, a major piece of the Belt and Road, stopped when the novel coronavirus started to spread in Pakistan in February. According to Johns Hopkins University data, Pakistan has confirmed 9,216 cases as of Tuesday, including 192 deaths.

Naghmana Hashmi, Pakistan's ambassador in Beijing, told Pakistani media on Sunday that a number of mechanisms have been established to complete all corridor projects within the prescribed time frame. But analysts say restarting the projects at the height of the pandemic is meant to spare Beijing and Islamabad embarrassment.

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Amid the economic crisis, some have questioned the economic viability of Belt and Road projects. According to the Planning Commission of Pakistan, the country's top development planning body, Chinese skilled laborers are paid 1,300% more than Pakistani laborers for the Main Line 1 (ML-1) railway project, a discrepancy it says must be rationalized.

The commission has also asked Pakistan Railways to evaluate the impact of a huge Chinese loan of almost $9 billion for the ML-1, which is the single largest infrastructure project for the corridor in the country. Pakistan expects 90% of the funding for the ML-1 to come from the Chinese loan. The commission fears the terms may saddle the country with heavy debt if it is not looked into now.

On the other hand, there are bullish voices who say that resuming Belt and Road projects is worth the risk.

Hasaan Khawar, a public policy analyst based in Islamabad, believes the corridor's special economic zones can help Pakistan solve its economic woes. "The world is changing fast, and it will be a different place by the time the pandemic is over. Investment flows will shrink, and China will be one of the very few countries with available capital," Khawar said. He added that the corridor and the zones provide a ready framework for Pakistan to attract Chinese capital and should, therefore, be a priority for Pakistan.

Malik believes that the aftermath of the COVID-19 crisis will leave China better positioned as a global power and savior of a world in deep crisis. After this, the world will see a continuation and expansion of Belt and Road projects, he says.

Kugelman sees the corridor as the most concrete and active part of the Belt and Road and says its trajectory will be shaped to a great extent by how the corridor develops. He adds that if corridor projects are put on hold until the pandemic has ended, the Belt and Road as a whole could take a pause. If they move ahead, that portends more forward movement for the initiative in the near future, Kugelman says.

[Riaz Haq]

“Because technology is the key weapon in the fight for control of the industries of the future and in combating pandemics, the US private tech sector will become increasingly integrated into the national-security-industrial complex.”

https://www.theguardian.com/business/2020/apr/29/ten-reasons-why-gr...

[Riaz Haq]

#US urges #China to waive #Pakistan’s #debt. “At a time of crisis like Covid-19, it is really incumbent on China to take steps to alleviate the burden that this predatory, unsustainable and unfair lending is going to cause to Pakistan” #CPEC #PMLN #COVID https://tribune.com.pk/story/2225775/1-us-urges-china-waive-off-pak...

The United States on Wednesday urged China either to wave off or renegotiate what it called “unsustainable and unfair” debt of Pakistan as it once again raised serious questions about the lack of transparency in the multibillion-dollar China-Pakistan Economic Corridor (CPEC).

“At a time of crisis like Covid-19, it is really incumbent on China to take steps to alleviate the burden that this predatory, unsustainable and unfair lending is going to cause to Pakistan,” said Alice Wells, the outgoing US Assistant Secretary of State for South and Central Asia.

“We hope China will join in either waving off debt or renegotiating these loans and creating a fair and transparent deal for Pakistani people,” Ambassador Wells said while addressing a farewell news briefing through a video link attended by journalists from South and Central Asia.
This was not the first time the US and Wells in particular publically questioned the viability of CPEC. Wells in the past also expressed similar views, declaring CPEC detrimental to Pakistan’s economy.

China always dismissed the US claims and instead challenged Washington to match its economic assistance to Pakistan.

Ambassador Wells, who is retiring this week, said the US supports CPEC and other development projects as long as they meet international standards, uphold environmental and labour standards.

“I enumerated my concerns and the United States government’s concerns over CPEC, over the lack of transparency involved in the project, over the unfair rates of profits that are guaranteed to Chinese state organisations to the distortions it caused in the Pakistani economy including by the massive imbalance in the trade Pakistan now has with China,” she argued.

Pakistan has been seeking debt relief from G20 countries to offset the negative fallout of coronavirus on its economy.

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The top US diplomat also spoke about President Trump’s South Asia strategy, which according to Wells, brought fundamental change in approach towards Pakistan.

She said that Trump’s strategy had made it clear that Pakistan had to take decisive action against terrorist and militant groups that supported conflict in Afghanistan.

The suspension of security assistance by President Trump in January 2018 was a demonstration of that resolve to hold Pakistan accountable for the alleged presence of terrorist groups on its soil, she added.

According to Wells, since then Pakistan had taken “constructive steps” to advance Afghan peace process. She said Ambassador Zalmay Khalilzad had developed “solid cooperation” with Pakistan civil and military leadership.

The US senior diplomat also praised Pakistan’s steps to eradicate threat posed by terrorist groups to regional stability.

“Pakistan is also taking initial steps towards curtailing other terrorist groups that threatened the region such as arresting and prosecuting Laskhar-e-Tayaba leader Hafza Saeed and beginning to dismantle terrorist financing structures.

“And as Pakistan’s commitment to the regional peace grown, we see initial growth in our relationship with Pakistan as well particularly in trade,” she further said.

[Riaz Haq]

EU Foreign Policy Chief Josep Borrell: “Analysts have long talked about the end of an American-led system and the arrival of an Asian century....This is now happening in front of our eyes” #US #China #Europe #America #Asia #COVIDー19 #Coronavirus https://www.newsweek.com/pressure-choose-sides-us-china-eu-diplomat...

Pressure to choose sides between the U.S. and China is growing amid the arrival of an "Asian century," a top European diplomat said today.

Europe is facing an "existential crisis" sparked by the COVID-19 crisis, which could be a catalyst in the demise of an American-led system, according to Josep Borrell, a vice president of the European Commission branch of the European Union (EU).

The diplomat, who also serves as the EU's High Representative for Foreign Affairs and Security Policy, told virtual participants of the German Ambassadors' Conference 2020 that the pandemic could be considered a "great accelerator of history."

Borrell claimed that in the world that emerges Asia will be increasingly important, while noting that China is fast becoming "more powerful and assertive."


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"Analysts have long talked about the end of an American-led system and the arrival of an Asian century. This is now happening in front of our eyes," he said. "If the 21st century turns out to be an Asian century, as the 20th was an American one, the pandemic may well be remembered as the turning point of this process."

His comments were first reported by the Associated Press.

Tensions have spiked between the U.S. and China in recent years,, with tit-for-tat trade tariffs being slapped on goods by both countries. U.S. officials have also complained about national security concerns linked to Chinese tech firms, and 5G.

This month, president Donald Trump told Fox Business that he didn't want to speak with China's leader, Xi Jinping, and suggested the U.S. may cut ties.

"We could cut off the whole relationship," he told Fox host Maria Bartiromo. "Now if you did, what would happen? You would save 500 billion dollars."

In April, Trump said in a briefing that "serious investigations" were being conducted into China's handling of the ongoing COVID-19 pandemic, which ravaged America this year, causing more than 1.6 million infections and close to 98,000 deaths.

China has claimed its own virus infection and death rates have plunged, although official health statistics have been met with widespread scepticism.

"We are not happy with that whole situation because we believe it could have been stopped at the source, it could have been stopped quickly, and it wouldn't have spread all over the world. And we think that should have happened," Trump fumed.

Borrell said today that the need for multilateral cooperation has "never been greater" but raised concerns that leadership from the White House is lacking.

"This is the first major crisis in decades where the U.S. is not leading the international response," the EU diplomat said. "Maybe they don't care, but everywhere we look we see increasing rivalries, especially between the U.S. and China.

He added: "The pressure to choose sides is growing. As the EU, we should follow our own interests and values and avoid being instrumentalized by one or the other.
Borrell went on to say that U.S.-China rivalry is often having a "paralysing" effect on the multilateral system, fueling more arguments and vetoes than agreements.

According to the transcript, he said: "We need a more robust strategy for China, which also requires better relations with the rest of democratic Asia. That's why we must invest more in working with India, Japan, South Korea et cetera.

[Riaz Haq]

#US-#China #Tradewar sends Kearney #US Reshoring Index to record high. It compares US domestic manufacturing to imports with Manufacturing imports from 14 Asian nations including #Bangladesh, #India, #Pakistan. #Vietnam is biggest beneficiary. #COVID__19 https://apnews.com/PR%20Newswire/fc57a9d217e2fc9c38d311f322d13e64

US companies in 2019 sourced substantially fewer manufactured goods from 14 traditional Asian trading partners, apparently as a direct result of aggressive US government trade policies, according to the seventh annual Kearney US Reshoring Index.

The ongoing trade war sent the Reshoring Index to a record high in 2019.

The Reshoring Index compares US domestic manufacturing gross output to the level of manufacturing imports from 14 traditional Asian low-cost countries (LCCs): China, Taiwan, Malaysia, India, Vietnam, Thailand, Indonesia, Singapore, Philippines, Bangladesh, Pakistan, Hong Kong, Sri Lanka, and Cambodia.

Kearney, the global management consulting firm that calculates the index, attributes much of the big 2019 shift to a 17 percent decline in US imports of manufactured goods from China, which has long been the leading choice for offshore production. Intriguingly, manufactured imports from Vietnam and Mexico both increased last year, evidence that US companies were starting to significantly adapt their sourcing strategies even before the COVID-19 crisis began disrupting global supply chains early in 2020.

Big Jump in Reshoring Index
In 2019, US manufacturing was steady while imports from the 14 Asian trading partners notably declined. Imports of manufactured goods from the 14 Asian LCCs shrunk to $757 billion from $816 billion in 2018—a 7.2 percent decrease—while US domestic manufacturing output was $6,271 billion in 2019, virtually unchanged from 2018.

Consequently, the US market imported just 12.1 cents worth of offshore production from the Asian LCCs for every $1 of domestic manufacturing gross output in 2019, nearly a full percentage point decrease in corresponding imports from the previous year.

The US Reshoring Index is expressed in basis points (1 percent change = 100 basis points). A positive index number indicates net reshoring. The precise 2019 Reshoring Index calculation is: 2018 import/domestic manufacturing ratio of 13.058 percent minus corresponding 2019 ratio of 12.077 percent = 0.98 change, or 98 bps. The resulting Reshoring Index of 98 is by far the highest yet registered. The previous index high was 11 bps in 2011. The index came in as low as -112 bps as recently as 2015.

2019 Insurgents
US trade policies also appear to be changing trade dynamics among and between the various countries exporting manufactured goods to the US. While US manufacturing imports from China declined, imports from the other Asian LCC countries increased by $31 billion in 2019. Similarly, manufacturing imports from Mexico rose $13 billion.

“Much of China’s loss was Vietnam’s gain,” said Patrick Van den Bossche, Kearney partner and co-author of the study. “Of the $31 billion in US imports that shifted from China to other Asian LCCs, almost half (46 percent) was absorbed by Vietnam, which exported $14 billion more manufactured goods to the US in 2019 than it did in 2018.”

“The door for these insurgents was clearly opened by ongoing US–China trade disputes, as their gains were mainly in product categories impacted by tariffs,” observed Yuri Castano, Kearney manager and co-author of the study. “Apparently, the trade war jolted US companies to start rethinking and reshaping their supply networks.”

Costs, risk and resilience
“2020 dawned with a disruption of a new order of magnitude―COVID-19,” noted Brooks Levering, Kearney partner and co-author of the study. “We anticipate that the harsh lessons of this crisis will compel companies to go much further in rethinking their sourcing strategies― indeed, their entire supply chains.”

[Riaz Haq]

#China announces $178.2 billion #military budget. Premier Li dropped the use of the word “peaceful” when talking of reunification with #Taiwan. #US Def Sec Mark Esper reaffirmed that his country would stand by Taiwan #Asia #geopolitics #India #Pakistan https://www.defensenews.com/global/asia-pacific/2020/05/22/china-an...

China has announced a 6.6 percent growth in its defense budget for this year, its lowest rate of increase for almost three decades.

The growth in China’s defense budget would see spending rise from $167 billion last year to $178.2 billion, an increase of about $11 billion. The country has the second-largest defense budget in the world, behind only the United States.

Despite the growth of China’s defense budget being at its lowest, in percentage terms, since the early 1990s, the 6.6 percent figure only represents a slightly lower figure than the 7-7.5 percent growth many analysts estimated before the pandemic. In real dollar terms, the $11 billion increase in defense spending is the fifth-highest increase ever for the country.

It also shows that China is determined that the People’s Liberation Army, or PLA, will remain insulated as much as possible from the negative economic effects of the COVID-19 pandemic, which resulted in China’s economy shrinking by 6.8 percent in the first quarter of 2020 compared to the same time last year.

Chinese Premier Li Keqiang said as much during his speech Friday at the opening of the annual gathering of its largely rubber stamp parliament. He pledged that the PLA would not be worse off.

“We will deepen reforms in national defense and the military, increase our logistic and equipment support capacity, and promote innovative development of defense-related science and technology,” he told legislators at the opening of the National People’s Congress, which kicked off Friday at the Great Hall of the People in China’s capital, Beijing.

Li also touched on the issue of Taiwan during his speech, reiterating that China would “resolutely oppose and deter any separatist activities seeking Taiwan independence.” He also called on the Taiwanese people to “join the mainland in opposing Taiwanese independence and to promote reunification."

China views Taiwan as a breakaway province, with the self-governing island off its coast having formed its own government in 1949 when Nationalist forces fled there following defeat at the hands of Communists during China’s civil war.

Perhaps tellingly, Li dropped the use of the word “peaceful” when talking of reunification with Taiwan, a departure from decades of using it as the standard expression Chinese leaders used when addressing parliament and mentioning Taiwan. Although China has never renounced the possible use of force for reunification efforts.

Li’s call for reunification came as U.S. Defense Secretary Mark Esper reaffirmed that the country would stand by Taiwan. Speaking on Hugh Hewitt’s radio show, Esper said the U.S. would “certainly live up to our commitments to Taiwan,” noting that it is also bound by the Taiwan Relations Act enacted by Congress, which pledges to supply Taiwan with weapons it needs for its defense.

Accordingly, the U.S. State Department announced Thursday that it has approved the sale of an additional 18 heavyweight submarine torpedoes to Taiwan for $180 million. The Mk 46 Mod 6 Advanced Technology torpedoes will equip Taiwan’s submarine fleet, and the approval follows another for 48 similar weapons in 2017.

Taiwan has reported that Chinese military activity around the island continues unabated throughout the ongoing pandemic, with Chinese naval vessels and military aircraft regularly operating in international airspace and waters around Taiwan.

China calls the movements routine training exercises. However, the island’s government sees these moves as part of an intimidation campaign against Taiwan and regularly publicizes PLA ship and aircraft movements in its vicinity.

[Riaz Haq]

Pakistan Drifting Away From US Towards China: Defence Analyst

http://www.businessworld.in/article/Pakistan-drifting-away-from-US-...

Amid the drastic change in US-Pakistan's relationship, China is the only hope for Pakistan for economic assistance, especially in the aftermath of the pandemic, said Ayesha Siddiqa, a defence analyst and South Asian politics scholar.
Speaking during an interview with The News International, Siddiqa said amid the fast-changing world dynamics wherein the coalition among the United States, India and Saudi Arabia gains strength, "Pakistan is drifting away from the US towards a potential alliance between China, Russia and perhaps Iran."
"The nature of US-Pakistan relations is changing drastically. Even though it has played a vital role in the US-Taliban negotiations, no one expects the continuation of American financial assistance to Pakistan. Islamabad joined the American alliance against the Taliban after 9/11," Siddiqa said.
"While the dominant narrative popularised by Islamabad was that it was forced into alignment, governments stuck to the narrow prism of extracting financial resources from the US, which also meant delivering reluctantly. The foreign policy debate in Pakistan is silent about our own responsibility in supporting the Taliban or keeping Osama bin Laden. Ultimately, the relationship collapsed at a point of overselling of our capabilities with limited capacity to deliver," she added.
The US-Pakistan relation has continued to be on a downhill as the latter has failed to take strong action against the terrorist groups emanating from its soil.
Due to the deteriorating ties, Siddiqa said, "China appears to be the only option. It may be Pakistan's only hope for economic assistance, especially in the aftermath of the pandemic... In the wake of the fast-changing world dynamics, as the coalition among the United States, India and Saudi Arabia gains strength, Pakistan is drifting away from the US towards a potential alliance between China, Russia and perhaps Iran."
She, however, noted that there are a lot of issues that still need to be worked out between these countries and Pakistan can benefit only "if it can do its homework and go beyond the idea of extracting limited benefits."
"There is an expectation that Pakistan and Iran will come close as a result of both being part of BRI, especially if Beijing and Tehran sign an agreement that is being talked about. Right now, we don't know if the agreement will get signed, but even if it does, I am not sure that we are domestically talking about the competition between Iran and Pakistan that will happen naturally. It was there even when both neighbours were once part of an American alignment," she said.
She further stated that Pakistan needs to improve its relations with its neighbours including India, Iran and Afghanistan.
While commenting on Pakistan's defence and foreign policy, Siddiqa said, "Pakistan's defence and foreign policy community lacks independent thinking and diversity of viewpoints. Over the years, alternative voices have been silenced. I was talking to a diplomat, who said that during her two postings to the country between 2016 and now, many people that she would talk to are no longer in the country. The security community that we have now comprising faculty at the known public sector universities and think tanks only preach to the choir by communicating dominant narratives of the establishment back to them through their reports. It is interesting to note that most of the think tanks are located on the Grand Trunk Road with little input from other parts of the country." (ANI)

[Riaz Haq]

In an interview with Pakistani journalist Israr Kasana that was published on YouTube on June 3, 2020,  (Indian Defense Analyst) Pravin (Sawhney) asserted that "Pakistan has never lost (to India) in any war, be it 1965 or 1971 or any other." "If Pakistan had lost, there would be no line-of-control or ceasefire line on the ground," he added.  Here's more from that interview:

"If Pakistan had lost we (India) would have erased the LOC...why do I say that? I have explained it in my book. Pakistan has been strong in the western sector. It's a myth that Pakistan is weak, a myth that Pakistan itself perpetrates...India says we (India) are strong when in fact it is not.....CPEC is extremely important...China will share a lot of military capability with Pakistan....China shares platforms and assures unlimited supply of spare parts which is crucial in war...China and Pakistan do frequent joint military exercises...to assure interoperability."

https://www.riazhaq.com/2020/09/defense-of-pakistan-day-has-pakistan.html

[Riaz Haq]

#IMF: #China is world's biggest #economy. IMF's "2020 World Outlook" shows that China’s #GDP($24.2 trillion) is one-sixth larger than #America’s($20.8 trillion). China has replaced #US as the largest trading partner of nearly every major nation. #COVID19 https://nationalinterest.org/feature/china-now-world%E2%80%99s-larg...

Explaining its decision to switch from MER to PPP in its annual assessment of national economies—which is available online in the CIA Factbook—the CIA noted that “GDP at the official exchange rate [MER GDP] substantially understates the actual level of China's output vis-a-vis the rest of the world.” Thus, in its view, PPP “provides the best available starting point for comparisons of economic strength and wellbeing between economies.” The IMF adds further that “market rates are more volatile and using them can produce quite large swings in aggregate measures of growth even when growth rates in individual countries are stable.”


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So what? If this were simply a contest for bragging rights, picking a measuring rod that allows Americans to feel better about ourselves has a certain logic. But in the real world, a nation’s GDP is the substructure of its global power. Over the past generation, as China has created the largest economy in the world, it has displaced the U.S. as the largest trading partner of nearly every major nation (just last year adding Germany to that list). It has become the manufacturing workshop of the world, including for face masks and other protective equipment as we are now seeing in the coronavirus crisis. Thanks to double-digit growth in its defense budget, its military forces have steadily shifted the seesaw of power in potential regional conflicts, in particular over Taiwan. And this year, China will surpass the U.S. in R&D spending, leading the U.S. to a “tipping point in R&D” and future competitiveness.

For the U.S. to meet the China challenge, Americans must wake up to the ugly fact: China has already passed us in the race to be the No. 1 economy in the world. Moreover, in 2020, China will be the only major economy that records positive growth: the only economy that will be bigger at the end of the year than it was when the year began. The consequences for American security are not difficult to predict. Diverging economic growth will embolden an ever more assertive geopolitical player on the world stage.

Graham T. Allison is the Douglas Dillon Professor of Government at the Harvard Kennedy School. He is the former director of Harvard’s Belfer Center and the author of Destined for War: Can America and China Escape Thucydides’s