“[Anyone], in any vocation, manual or mechanical…may by honest industry and ordinary prudence, acquire an independent provision for himself and family; so high are the wages of labor, averaging at least double the rate in England, and quadruple that in France; so comparatively scanty the population; so great the demand for all kinds of works; so vast the quantity, and so low the price of land; so light the taxes; so little burdensome the public expenditure and debt”. These are the words from the Letters from America to friends in the Old World during the eighteenth-century when Europe and America was vying for the skilled labor that came swarming into the New World (America) as the economic lure and pluralistic pull of the society attracted them. Between 1820 to 1914, more than 30 million people poured into the United States – the largest human migration in the history of the world.
Recently, what seems to be an about turn from the previous policies, the new administration in White House is re-writing the American pluralism and social diversity along with re-imbuing the economic picture. First step was the surprising victory of Trump. And that was enough. What follows is a story of executive orders of a protectionist bent. The Muslims felt marginalized (visa ban), the environmentalists threatened (sanctioning the controversial North Dakota and Keystone XI pipelines and his disregard for climate change), and Asia-Pacific disappointed (repealing TPP).
And while the US struggles to stave off these isolating actions, another country in the far-east is warming up, attempting to replace the incumbent occupant of world power – People’s Republic of China. Mr. Xi Jinping announced a dream back in 2013 called the Chinese Vision 2050. China is developing trade relationships with all the small countries around it, known as strings of pearl strategy. One can see how China’s One Belt One Road initiative is a part of the aforesaid strategy. Recently, China’s Gross Domestic Product on the basis of purchasing power parity has surpassed that of USA, and according to Centre for Economics and Business Research (CEBR), it is not very long that China’s GDP will hurtle passes that of the US (by 2029).
Now that the Trans-Pacific Partnership is a bygone story, China backed Regional Comprehensive Economic Corridor (RCEP), has a full chance of succeeding. The cancellation of the deal has created uncertainty among the US trading partners like Japan and Vietnam, who were to draw huge benefits from the trade pact. Now to appease these countries, China provides an alternative in the shape of RCEP, including the 12 proposed in TPP along with four more making the total number 16. This can also help Beijing in the issue of South China Sea. Malaysia, Philippines and Vietnam have claimed the territory, but despite the dissent, China has been successful in creating artificial Islands, forming a strong footing in the Sea. At the World Economic Forum, there was a very inquisitive quirk, a surprising change in the point of views of the world’s leading nations. While Trump called for shutting borders and building walls, the Communist China, hailed the significance of Globalization and bilateral trade and that it is important for the world economy as a whole.
Does this mean China is now ready to take the United States of America, whose economy since 1871 always topped the world rankings, as a global power? It cannot be answered in a binary manner. Chinese economy is ridden with non-performing bank loans. Further, their transition in the nascent stages from an export led economy to customer driven is a big question mark. Also, the once cherished and highly exploited ‘wage’ difference of the far-eastern country has started to diminish gradually; companies are looking towards Thailand and Vietnam as a manufacturer’s haven. By the virtue of One Child policy, now changed, the Chinese population is one of the fastest aging in the world. Following the same analogy, matters have not been much tricky for US as they are now. Mr. Trump has a knack for the past and seems to be sticking with his nationalist rhetoric and protectionist policies. Reduced corporate taxes, de-regularization and increased government spending is likely to strengthen the dollar to a level that will be detrimental to their exports and also for the world as a whole. His ‘visa-bans’ may put a cork stopping the brain drain into the US.
On one side is a country of immigrants with a history of not more than 300 years, a nation that took the world aback by its rise from being a former colony to being the undisputed military and economic power, and on the other, a country which cherishes a history thousands of years deep into the ancient times; a nation that after so many pillaging and destruction has been prominent on the world stage through inexorable will and relentless resolve. Both account for more than 36 percent of the world’s output. Both are the biggest trading partner of each other. And in this world where the growth of globalization has rendered the tapestry of the international relations so closely entangled, it is in the prosperity of each other that both the behemoths can survive. Who will cross whom? Amy Chua, in her best-seller, Day of Empire, while explaining the rise and fall of Hyper-Powers analyses three contenders which can challenge US on the stage of global dominance: European Union, India and China. EU is susceptible of late to falling a victim to the populist epidemic, the fastest growing economy of Asia, on the other hand, has to overcome its rightist “Hindutva” doctrine and also the widespread corruption first. China, with all its internal issues looks promising though. But US will not let go of its position, easily.
The writer is a student of International Relations with interest in International Political Economy. He can be reached at email@example.com