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Why America’s Edge Will Endure
ccording to the Global Language Monitor, which tracks the top 50,000 media sources throughout the world, the “rise of China” has been the most read-about news story of the twenty-ªrst century, surpassing the September 11 terrorist attacks, the Iraq War, the election of Barack Obama, and the British royal wedding.1 One reason for the story’s popularity, presumably, is that the rise of China entails the decline of the United States. While China’s economy grows at 9 percent annually, the United States reels from economic recession, costly wars in Iraq and Afghanistan, and massive budget deªcits. This divergence in fortunes has produced two pieces of conventional wisdom in U.S. and Chinese foreign policy debates.2 First, the United States is in decline relative to China. Second,
Michael Beckley is a research fellow in the International Security Program at Harvard Kennedy School’s Belfer Center for Science and International Affairs. He will become an assistant professor of political science at Tufts University in the fall of 2012. For comments on earlier drafts, the author thanks Samuel Berkowitz, Richard Betts, Michael Horowitz, Robert Jervis, Andrew Nathan, Dianne Pfundstein, Stefano Recchia, William Wohlforth, Silvana Zepeda, and the anonymous reviewers. 1. “Top News Stories of the 21st Century,” Global News Monitor, http:/ /www.languagemonitor .com/top-news/bin-ladens-death-one-of-top-news-stories-of-21th-century/. 2. Many studies make these arguments. See, for example, Arvind Subramanian, “The Inevitable Superpower: Why China’s Rise Is a Sure Thing,” Foreign Affairs, Vol. 90, No. 5 (September/October 2011), pp. 66–78; Gideon Rachman, “American Decline: This Time It’s for Real,” Foreign Policy, No. 184 (January/February 2011), pp. 59–65; Wu Xinbo, “Understanding the Geopolitical Implications of the Global Financial Crisis,” Washington Quarterly, Vol. 33, No. 4 (October 2010), pp. 155– 163; Christopher Layne, “The Waning of U.S. Hegemony—Myth or Reality? A Review Essay,” International Security, Vol. 34, No. 1 (Summer 2009), pp. 147–172; Robert A. Pape, “Empire Falls,” National Interest, No. 99 (January/February 2009), pp. 21–34; Martin Jacques, When China Rules the World: The Rise of the Middle Kingdom and the End of the Western World (New York: Penguin, 2009); National Intelligence Council (NIC), Global Trends 2025: A Transformed World (Washington, D.C.: NIC, 2008); Cui Liru “Quanqiu shidai yu duoji shijie” [A multipolar world in the era of globalization], Xiandai Guoji Guanxi, No. 1 (2010), pp. 1–4; and Chen Yugang, “Jinrong weiji, Meiguo shuailuo yu guoji guanxi geju bianpinghua” [The ªnancial crisis, American decline, and the ºattening of the international structure], Shijie Jingji yu Zhengzhi, No. 5 (2009), pp. 28–34. For the alternative, but less prevalent perspective that the United States is not in decline, see, for example, Joseph S. Nye Jr., The Future of Power (New York: Perseus, 2011), chap. 6; Daniel W. Drezner, “China Isn’t Beating the U.S.,” Foreign Policy, No. 184 (January/February 2011), p. 67; Eric S. Edelman, Understanding America’s Contested Primacy (Washington, D.C.: Center for Strategic and Budgetary Assessments, 2010), chap. 3; Josef Joffe, “The Default Power: The False Prophecy of America’s Decline,” Foreign Affairs, Vol. 88, No. 5 (September/October 2009), pp. 21–35; Edward Luttwak, “The Declinists, Wrong Again,” American Interest, Vol. 4, No. 2 (November/December 2008), pp. 7–13; Song Wei, “Guoji jinrong weiji yu Meiguo de danji diwei” [The global ªnancial crisis and America’s unipolar status], Shijie Jingji yu Zhengzhi, No. 5 (2010), pp. 25–48; and Xu Jin, “Jinrong weiji nanyi dianfu yi chao duo qiang geju,” [The ªnancial crisis will not likely overturn the one superpower, many strong powers structure], Shijie Jingji yu Zhengzhi Zhengzhi, No. 12 (2008), pp. 26–27.
International Security, Vol. 36, No. 3 (Winter 2011/12), pp. 41–78 © 2011 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
International Security 36:3 42
much of this decline is the result of globalization—the integration of national economies and resultant diffusion of technology from developed to developing countries—and the hegemonic burdens the United States bears to sustain globalization. An alternative, though less prevalent, perspective rejects both of these assumptions.3 In this view, U.S. power is durable, and globalization and America’s hegemonic role are the main reasons why. The United States derives competitive advantages from its preponderant position, and globalization allows it to exploit these advantages, attracting economic activity and manipulating the international system to its beneªt. Resolving the debate between these two perspectives is imperative for prudent policymaking. If proponents of the dominant, or “declinist,” perspective are correct, then the United States should contain China’s growth by “[adopting] a neomercantilist international economic policy” and subdue China’s ambitions by “disengag[ing] from current alliance commitments in East Asia.”4 If, however, the United States is not in decline, and if globalization and hegemony are the main reasons why, then the United States should do the opposite: it should contain China’s growth by maintaining a liberal international economic policy, and it should subdue China’s ambitions by sustaining a robust political and military presence in Asia. With few exceptions, however, existing studies on the decline of the United States and the rise of China suffer from at least one of the following shortcomings.5 First, most studies do not look at a comprehensive set of indicators. Instead they paint impressionistic pictures of the balance of power, presenting tidbits of information on a handful of metrics. In general, this approach biases
3. Salvatore Babones, “The Middling Kingdom: The Hype and Reality of China’s Rise,” Foreign Affairs, Vol. 90, No. 5 (September/October 2011), pp. 79–88; Nye, The Future of Power, chap. 6; Drezner, “China Isn’t Beating the U.S.,” p. 67; Edelman, Understanding America’s Contested Primacy, chap. 3; Joffe, “The Default Power”; Stephen G. Brooks and William C. Wohlforth, World Out of Balance: International Relations and the Challenge of American Primary (Princeton, N.J.: Princeton University Press, 2008); Edward Luttwak, “The Declinists, Wrong Again,” pp. 7–13; Song Wei, “Guoji jinrong weiji yu Meiguo de danji diwei,” pp. 25–48; and Xu Jin, “Jinrong weiji nanyi dianfu yi chao duo qiang geju,” pp. 26–27. 4. Christopher Layne “From Preponderance to Offshore Balancing: America’s Future Grand Strategy,” International Security, Vol. 22, No. 1 (Summer 1997), pp. 87, 118. See also Paul K. MacDonald and Joseph M. Parent, “Graceful Decline? The Surprising Success of Great Power Retrenchment,” International Security, Vol. 35, No. 4 (Spring 2011), pp. 7–44; and Barry Posen, “The Case for Restraint,” American Interest, Vol. 3, No. 2 (November/December 2007), pp. 7–32. 5. Partial exceptions include Sheena Chestnut and Alastair Iain Johnston, “Is China Rising?” in Eva Paus, Penelope B. Prime, and Jon Western, eds., Global Giant: Is China Changing the Rules of the Game? (New York: Palgrave, 2009), chap. 12; and Titus Galama and James Hosek, U.S. Competitiveness in Science and Technology (Santa Monica, Calif.: RAND, 2008).
China’s Century? 43
results in favor of the declinist perspective because most standard indicators of national power—for example, gross domestic product (GDP), population, and energy consumption—conºate size with power and thereby overstate the capabilities of large but underdeveloped countries. For example, in a recent study Arvind Subramanian contends that “China’s dominance is a sure thing” based on “an index of dominance combining just three factors: a country’s GDP, its trade (measured as the sum of its exports and imports of goods), and the extent to which it is a net creditor to the world.”6 The United States and China, however, are each declining by some measures while rising in terms of others. To distinguish between ascendance and decline writ large, therefore, requires analyzing many indicators and determining how much each one matters in relation to others. Second, many studies are static, presenting single-year snapshots of U.S. and Chinese power. This ºaw tends to bias results in favor of the alternative perspective because the United States retains a signiªcant lead in most categories. The key question, however, is not whether the United States is more powerful than China at present, but whether it will remain so in the future. Without a dynamic analysis, it is impossible to answer this question. This study addresses these shortcomings by comparing the United States and China across a large set of economic, technological, and military indicators over the past twenty years. The results are mixed, but the bulk of the evidence supports the alternative perspective. Over the last two decades, globalization and U.S. hegemonic burdens have expanded signiªcantly, yet the United States has not declined; in fact it is now wealthier, more innovative, and more militarily powerful compared to China than it was in 1991. China has narrowed the gap in terms of GDP and now exports a greater volume of high-technology products and employs more scientists than any country in the world. However, GDP correlates poorly with national power; more than 90 percent of China’s high-tech exports are produced by foreign ªrms and consist of low-tech components; and China’s quantitative advantage in scientists has not yet translated into qualitative advantages in innovation. The United States suffers from a huge debt problem that its political system appears ill-suited to solve. China, however, faces its own ªscal mess, which may be more intractable than America’s. The widespread misperception that China is catching up to the United States stems from a number of analytical ºaws, the most common of which is
6. Subramanian, “The Inevitable Superpower,” p. 67.
I test these two perspectives empirically. The Rise and Fall of the Great Powers: Economic Change and Military Conºict from 1500–2000 (New York: Vintage. obscures China’s decline relative to the United States in all of these categories. the United States. The Decline Debate At its core. p. Keohane. 11.S. No. No. On hegemonic stability theory.S.” Comparative Studies in Society and History.”11 The Habsburg. Siverson. 12.13 In this view.”9 as an “observable pattern of great power emergence. Declinists contend that history tends to repeat itself and that the history of world politics can be characterized as a “succession of hegemonies. 1 (Winter 1990/ 91). George Modelski. 4 (Spring 1993). value added in hightechnology industries.”8 as the recurrent “rise and fall of the great powers.. many studies note that the growth rates of China’s per capita income. 1929–1939 (Berkeley: University of California Press. however. Paul Kennedy. For example. Change in the International System (Boulder.” Foreign Affairs. 13. Christopher Layne. . Finally. On the distinction between “rising” and “catching up. Randolph M. 20 (April 1978). pp. pp. China’s growth rates are high because its starting point was low. 1973). Charles Krauthammer. supplies the world with public goods.7 This article proceeds in three sections. I discuss the dangers of the false belief in American decline. “The Unipolar Illusion: Why New Great Powers Will Rise. and military spending exceed those of the United States and then conclude that China is catching up.12 Several established academic theories underpin this cyclical view of history.-China power balance from data that compare China only to its former self. 1987). “The Theory of Hegemonic Stability and Changes in International Economic Regimes. declinists fuse hegemonic stability theory with traditional balance of power theory. the debate about U. Vol. 10. 9.” see Chestnut and Johnston.International Security 36:3 44 the tendency to draw conclusions about the U. Vol. 1981). “The Long Cycle of Global Politics and the Nation-State. see Charles P. 9. China is rising. Second. Kindleberger. No. This focus on growth rates. like Great Britain in the nineteenth century. French. 17.” in Ole R. Weaker states not only 7.”10 or as a series of “long cycles. First. War and Change in World Politics (Cambridge: Cambridge University Press. and Robert O. 1967–1977. “Is China Rising?” 8.” International Security. and British Empires were defeated and surpassed by rising challengers. 23–33. Robert Gilpin. “The Unipolar Moment. eds. It is therefore natural for America’s “unipolar moment” to be similarly consigned to the ash-heap of history. I discuss the theoretical foundations of the declinist and alternative perspectives. but it is not catching up. 214–235. 70. Holsti. First. and Alexander L. The World in Depression. decline is a debate about the relevance of history. George.
Pape. William J. On balance of power theory.” International Security.: Harvard University Press. pp. Vol. 515. Vol.”20 In sum. rather. The United States is not like Britain.” adopting modern technologies and methods while skipping the long. The Rise and Fall of the Great Powers. and Welfare: What the Long-Run Data Show. 1980). Alexander Gerschenkron. pp.: Westview. a shift that makes China’s rise categorically different from that of predecessors such as Germany. 1 (Summer 1999). 20. 17. 15. Why the Poor Get Richer and the Rich Slow Down (Austin: University of Texas Press.” Brookings Papers on Economic Activity. Layne. and Walt W. 1978). and South Korea before it. see Jeffrey Sachs. p. Japan. 2 (Fall 1994). 259–301. .” International Security. No. whereas the alternative perspective emColo. 19. 1. its “combination of quantitative and qualitative material advantages is unprecedented. 1 (Summer 2005). “The Unipolar Illusion”. Kennedy. 24. 204. 7–45. the basic argument of the alternative perspective is that the laws of history do not apply to contemporary world politics. 14. Robert Gilpin. General X-Efªciency Theory and Economic Development (New York: Oxford University Press. 32.”18 Globalization thus stimulates growth abroad while undercutting it at home. pp. Anders Aslund. initiatives and forming anti-American alliances. 1979). William C.16 China. Vol. By contrast.S. like Germany. Edward S. 76 (December 1986). Waltz. poor countries tend to grow faster than rich countries.”19 Moreover. No. arduous process of inventing them.” World Development. 1072–1085. investment in foreign countries “tends to abort the reinvigoration of the American domestic economy and its technical infrastructure. No. 18. see Kenneth N. 18. 1975). “The Emerging Structure of International Politics. and South Korea. 1962). diffusing not just technology but also technological and military capabilities. “China’s Shallow Integration: Networked Production and the New Challenges for Late Industrialization. 30. pp. On the argument that open economies converge. others rise while the United States suffers from “imperial overstretch.China’s Century? 45 free-ride on these services. Japan. and Robert A. 44–79. and it translates into a unique geopolitical position.S. “its emergence is occurring in the context of a transformation in the manner in which production is organized. 98–112.S. Waltz. 16. Vol. can reap the “advantages of backwardness. China is not like past rising challengers. Power and the Multinational Corporation: The Political Economy of Foreign Direct Investment (New York: Basic Books. Vol. 17. 1971. 1 (1995). pp. Economic Backwardness in Historical Perspective (Cambridge.” American Economic Review. chap. erecting diplomatic and economic obstacles to U.S. No.14 As a result. Theory of International Politics (New York: Random House. 131–162. the declinist perspective emphasizes how U. “The Stability of a Unipolar World. Convergence. Andrew Warner. Baumol. Rostow. “Soft Balancing against the United States. 11 (April 2004).”15 Second is the theory of convergence and its claim that. p. p. Harvey Leibenstein. Wohlforth.17 Meanwhile U. “Economic Reform and the Process of Global Integration. pp. but also engage in sabotage.” International Security. 1980). hegemony and the current global economy resemble those of past eras. Vol. in an open global economy. and Stanley Fisher. Steinfeld. Kenneth N. “Productivity Growth. p. U. Mass.
488–540. Hegemony. War and Change in World Politics. 138–139. 845. hegemony may depend less on direct territorial control.”22 In this view.”26 The hegemon’s dilemma is most pronounced in three areas: security. No. I elaborate these two focal points of debate below. “The Limits of Hegemonic Stability. War and Change in World Politics. Kindleberger. pp. No. “Leadership. and trade. 22. 40. U. 27. ªnance. Vol. or such oldfashioned notions as noblesse oblige”25—but they do agree that the public goods the United States provides “are not productive investments. unwilling or unable to force others to help maintain the international order. obligation. “The Remaking of a Unipolar World. chap. p. the United States must provide and police a regime of free commerce regardless of what other countries do.” International Organization.” International Organization. 7–19. they constitute an economic drain on the economy of the dominant state.” . “insures that it will experience a relative economic decline and in time. therefore. No. and spends 25 percent more (in real 21. Duncan Snidal. 384.24 for others. Vol. see David Lake. the hegemon acts out of self-interest.23 Declinists do not agree on why the hegemon sacriªces its resources and energy to support the system—for some. the United States. and the International Economy: Naked Emperor or Tattered Monarch with Potential?” International Studies Quarterly. the United States is suffering from a classic case of the “hegemon’s dilemma. This policy. pp. Vol. No. Vol. 4. p. the resources the hegemon must expend to defend them.International Security 36:3 46 phasizes how they are unique. but the basic pattern of greater power begetting greater military burdens still seems to apply—the United States now formally guarantees the security of more than ªfty countries. and the International Economic Order. 467–468. 38. pp. Ibid. and Gilpin. the United States is either benevolent or impotent. 4 (Autumn 1985). 23. 156–157. pp. duty. however.S. 37. Gilpin. the very extent of the hegemon’s inºuence multiplies and magniªes threats to its core interests and. Robert Jervis.27 Ancient Rome. The Rise and Fall of the Great Powers.” International Organization. 4 (December 1993). pp. 3 (Summer 2006). sought security through territorial expansion. in the security realm. 25. Kennedy. Arthur Stein.”21 To maximize its absolute economic gains. Vol. the hegemon is motivated by “conscience. Gilpin. has fought twice as many wars after the Cold War as during it. 29. 26.” Washington Quarterly. p. 39. 4 (Autumn 1986). War and Change in World Politics. and Layne. Charles P. 24. 2 (Spring 1984). “The Hegemon’s Dilemma: Great Britain. but this strategy simply created more distant frontiers to defend. 589. hegemony: costly or proªtable? According to declinists. First. No. for example. On hegemonic feebleness. as a result. a decline in its hegemonic position. “From Preponderance to Offshore Balancing. “Hierarchy versus Inertial Cooperation.
7–14. Global Trends 2025. pp. No. Doing so. 2 (June 1981). 74. Gibler.28 Second.J. Hirschman. thereby increasing the risk of a dollar collapse.S.29 Even if foreigners hold on to their dollar-denominated assets. 2008).” Foreign Affairs. Charles P.30 In addition. 2010).” American Economic Review. 6 (November/December 2007). the United States must maintain an open market.” Proceedings. 3 (August 1966).” Working Paper (New York: Center for Geoeconomic Studies.China’s Century? 47 dollars) on defense today than it did in 1968 at the height of combat in Vietnam. chap. Power and the Multinational Corporation. 48. “China’s $1. and Free Riders. 1–2. 86. “The Theory of Hegemonic Stability”. and Roger C. defense spending.” Review of Economics and Statistics. Public Goods. pp. 2 (May 2010). as a consequence. 31. and Richard Zeckhauser. Vol. Betts. Vol.C. .” International Studies Quarterly. Carmen M. 7–12. to prevent the collapse of the global free trade regime. On U. p. Vol. because the United States allows the dollar to function as a global reserve and exchange unit. Current Account Position Revisited.S. 266–279. Vol. pp. Sovereign Wealth and Sovereign Power: The Strategic Consequences of American Indebtedness (New York: Council on Foreign Relations Press. Francis E.5 Trillion Bet: Understanding China’s External Portfolio. Albert O. and NIC. undermines not only the competitiveness of U. loom especially large in this respect. No. 100. 30. 48.: Congressional Quarterly Press. Gold and the Dollar Crisis: The Future of Convertibility (New Haven. No. chaps. Rogoff. Council on Foreign Relations. and Giplin. 1945).D.32 Third. On U. Altman and Richard N. On recent American war-proneness. “A Disciplined Defense. No. 25. and Brad Sester.” Foreign Affairs. How Dangerous Is U. the United States’ rising deªcits trigger higher interest rates and.S. May 2009). exports but also the conªdence of markets and central banks in the dollar. 1 (January/February 1995). see Nuno Monteiro. Robert Gilpin. “Free-Rider Redux. however. pp. because its economy accounts for a large portion of the world economy. pp. even in the face of foreign protectionism. Subramanian. 33. policy by threatening to sell their reserves. Government Debt? (New York: Council on Foreign Relations Press. “American Proºigacy and American Power. and David Gompert and Richard Kugler. 2010). U.S. Reinhart and Kenneth S. 242–254. N. 29. slower rates of economic growth. No. National Power and the Structure of Foreign Trade (Berkeley: University of California Press. “Inevitable Superpower”. and Brad Sester and Arpana Pandey. 67–80. Conn.31 China’s holdings. see Richard K. Vol. International Military Alliances from 1648 to 2008 (Washington.33 As Arthur Stein writes. manipulating U. 25–34. Robert Trifªn. alliances. 32.S. No. 89. “An Economic Theory of Alliances. “Hegemons do not impose openness. Haass. 323–340.S. foreign creditors can wield their dollars as weapons.S. Warnock. Maurice Obstfeld and Kenneth Rogoff. Federal Reserve Bank of San Francisco (2005). “The Unsustainable U. “Growth in a Time of Debt. at $1.” Ph. 1987).: Princeton University Press. 573–578. see Douglas M. D. dissertation. Vol. pp. 1. 2009. The Political Economy of International Relations (Princeton. 1960). it must run persistent balance-of-payments deªcits to supply the world with liquidity. University of Chicago. Kindelberger. they bear its 28. “Three Essays on Unipolarity.5 trillion and climbing. pp. “Dominance and Leadership in the International Economy: Exploitation. Mancur Olson Jr.” Foreign Affairs. Keohane.: Yale University Press. 6 (November/December 2010). pp.
G. Most obvious. 4. and Bruce M. See also Isabelle Grunberg. 208. “System Maker. Privilege Taker: U. Hegemony and International Cooperation (New York: Cambridge University Press. chap.: Brookings Institution. 191–212. as hegemon. 1992). 439–444. market. 4.. 1994). Force without War (Washington. Korean. foreign aid. 38. Barry Blechman and Stephen Kaplan. however. Vol. Stein. chap. 36. D. Michael Mastanduno. accruing primarily to the hegemon and thus helping maintain its hegemony. “The Mysterious Case of Vanishing Hegemony. hegemony is not just preponderant power. the United States is neither benevolent nor feeble. Martin’s. Vol. Power and the International Political Economy. The United States is both “system-maker and privilege-taker”—it pays a large share of system-maintenance costs but takes a disproportionate share of the beneªts. 207–231. Ibid. 4 (Autumn 1990). and European trade barriers during the Cold War as prime examples of such “asymmetrical trade agreements. 39. or deny access to the U. John Ikenberry. pp. American Hegemony and the Trilateral Commission (New York: Cambridge University Press. to shape the normative frameworks within which states relate to one another. and the goods it produces “are less collective goods than private ones. “Exploring the ‘Myth’ of Hegemonic Stability. 2 (Spring 1985). 39. 386. are not as consequential as the United States’ power over aspects of the international system itself.” p.” World Politics. “The Mysterious Case of Vanishing Hegemony. It is.” pressuring other countries into making concessions by shifting military units around or putting them on alert. bribes. or. 121–154. In the alternative perspective. Vol. No. 2005).” International Organization.”34 Declinists tout Britain’s unilateral repeal of the Corn Laws in 1849 and the United States’ tolerance of Japanese. p. 27 (December/January 2001–02). No. and to change the range of choices open to others without putting pressure directly on them. 1 (January 2009). Russett. No. The Future of Power. restrict. The Case for Goliath: How America Acts as the World’s Government in the Twenty-First Century (New York: PublicAffairs. less visible and more profound than brute force.S.C. possesses an array of tools with which to reward and punish.S. . but coercive and capable. the United States. but these declinist arguments tell only part of the story. 44. Is Mark Twain Really Dead?” International Organization. support for membership in international organizations. Stephen Gill. allows the United States to employ “force without war. “American Power and the Empire of Capitalist Democracy. “The Hegemon’s Dilemma. pp.”38 Military superiority.39 It also allows 34. Russett. and White House visits. 2010). for example. 359. 1978).S. it is “structural power. 37.” p. Nye. 61. Vol. technology.” Review of International Studies. America’s Global Advantage: U.International Security 36:3 48 costs. Carla Norrlof.”37 It is the power to set agendas. pp. Seen in this light. 35. chap. States and Markets (New York: St. 1. at once. pp.36 The basic claim of the alternative perspective is that these beneªts outweigh the costs. Susan Strange.”35 Hegemony is indeed expensive and provocative. It can provide. These tit-for-tat bargains with individual states. See also Michael Mandelbaum.
” unable to disentangle their interests from those of the United States.. foreign governments that hold dollar reserves depend on U. more often it is a factor not mentioned openly but present in the back of statesmen’s minds. p.”43 The dollar’s global role may handicap American exports. The Future of the Dollar (Ithaca. garnering inºuence through the provision of security. World Out of Balance. 46. Past bids for global mastery were strangled before hegemony could be fully consolidated. By historical standards. prosperity for their continued economic growth and are thus “entrapped. on the other hand. the existing order collapsed around it. The Rise and Fall of the Great Powers. As Joseph Nye explains. Joseph S. the American military role in deterring threats to allies. Vol..”40 To be sure. 42. 19. “The Stability of a Unipolar World.” in Eric Helleiner and Jonathan Kirshner. Wohlforth. but it also comes with perks including seigniorage. rather. 31.41 Past hegemons succumbed to imperial overstretch after ªghting multifront wars against major powers and spending more than 10 percent (and often 100 or 200 percent) of their GDPs on defense. 2008). Sometimes the linkage may be direct. 43. Benjamin J. See Cohen.” p. 8. or of assuring access to a crucial resource such as oil in the Persian Gulf. The United States. Calleo “Twenty-First Century Geopolitics and the Erosion of the Dollar Order.Y. has the advantage of being an extant hegemon—it did not overturn an existing international order. its dominant position is entrenched to the point that “any effort to compete directly with the United States is futile. Paul Kennedy. Cohen estimates that the United States earns $20 billion annually from seignorage. chap.China’s Century? 49 the United States to run a protection racket. 1991). means that the provision of protective force can be used in bargaining situations. Global Monetary Governance (New York: Routledge. and the ability to delay and deºect current account adjustments onto other countries. military force would still play an important political role. pp. see David P. p. See also Brooks and Wohlforth.S. 18. so no one tries.S. however. chap.42 The United States. they are exceptionally small. On the beneªts of reserve currency status. Jonathan Kirshner. 44. 2009).” New Perspectives Quarterly. N. Nye Jr. Kennedy. As a result. spends 4 percent of its GDP on defense and concentrates its enmity on rogue nations and failed states.: Cornell University Press. “Even if the direct use of force were banned among a group of countries. Bound to Lead: The Changing Nature of American Power (New York: Basic Books. 2.44 reduced exchange rate risks for U.45 More important.S. eds. 41. No. 45. military superiority are substantial. “The Greatest Superpower Ever. ªrms involved in international commerce. Currency and Coercion: The Political Economy of International Monetary Power . 2 (Spring 2002). the costs of maintaining U. 8–18. by contrast. 258.46 Rather than 40. competitive advantages for American banks in dollarized ªnancial markets. For example.
S. see Jonathan D. and Norrlof. 1958). 73. No. 5. Vol. there is an opposing “diffusive effect”.. “American and Chinese Power after the Financial Crisis. 117–119.: Yale University Press. Conn. 90–95. asserted the right with their own national law to single out and punish countries they judged to be unfair traders. pp. No. 21. chap. Privilege Taker.” Washington Quarterly. 1995). Grand Strategy after the Cold War.” Foreign Affairs. 50. No.: Princeton University Press. Joseph S. Caverley. 47. 1990).” Foreign Policy. chaps. Instead it clusters in particular places at different times. 51.J. Albert O. “America’s Arms-Trade Monopoly: Lagging Sales Will Starve Lesser Suppliers. China’s Rise in the World Information and Communication Technology Industry (New York: Routledge. Patrick.”50 Globalization. pp. 5. “Bad Debts: Assessing China’s Financial Inºuence in Great Power Politics. therefore.” Security Studies. World Out of Balance. Vol. 2 (Fall 2009). pp. however. “United States Hegemony and the New Economics of Defense.47 Finally. pp. Vol. 4 (October/December 2007). 48. there is what Albert Hirschman called the “polarization effect” by which wealth and power concentrate in areas that are already wealthy and powerful. chap. Vol. 13–20. 33. Nye Jr. The Strategy of Economic Development (New Haven. for economic activity to spread to new locations. 126. On one hand. ªrms. Brooks and Wohlforth. Vol. Michael Mastanduno. The relative strength of two opposing tendencies determines where growth takes place.” International Security. 34. Kapstein.48 Declinists expect the hegemon to use its power magnanimously.S. For an application of this argument to the defense industry. the United States can distort international markets in its favor. pp. Nye. 49–88. See also Strange. On this point. see John Stremlau. According to the alternative perspective. “Clinton’s Dollar Diplomacy. No. but a political process shaped by the United States in ways that serve its interests. and Ethan B. trade ofªcials. “Preserving the Unipolar Moment: Realist Theories and U. No. Bound to Lead.. Michael Mastanduno. Daniel W. Drezner. No. N. States and Markets. 49.” p. pp. pp. Hirschman. 8. “System Maker. . 146–149.” International Security.49 U. pp. globalization: diffusion or polarization? Economic growth does not appear everywhere and all at once. “acting as self-appointed enforcers of the free trade regime. given its position at the top of the world trade regime. America’s Global Advantage. American foreign economic policy involves the routine use of diplomatic leverage at the highest levels to create opportunities for U. 4 (October 2010). 187–192. may not be a neutral process that diffuses wealth evenly throughout the international system. Jagdish Bhagwati and Hugh T. (Princeton. Aggressive Unilateralism: America’s 301 Trade Policy and the World Trading System (Ann Arbor: University of Michigan Press. 2009). eds. Lutao Ning. 598–614.S. 4 (Spring 1997). 16.51 On the other hand. 7–45. they invest in its continued expansion. 4. 18–35.International Security 36:3 50 seeking to undermine the American economy. and Brooks and Wohlforth. the tendency for ideas and technology to trickle down from established centers to peripheral areas and. pp. 3 (May/June 1994). World Out of Balance. as a result. pp. 97 (Winter 1994/95). 121–129.
but rather a source of competitive advantage. 88–93. 1. many scholars believe it is easier for developing countries to adopt existing technologies than for developed countries to invent new ones.” in Titus Galama and James Hosek. Robert D. 1 (February 1978). 1997). and Orit Gadiesh.” Harvard Business Review. Norton. U. 53. 19. September 2007. pp. 38. see Adam Segal.” p. 1–16. Fareed Zakaria writes. by importing and copying foreign high-technology products. Competitiveness in Science and Technology (Santa Monica. Developing countries can therefore advance rapidly “from imitation to innovation.” Journal of International Economics. eds. “The Global Diffusion of S&T and the Rise of China. The Post-American World (New York: W. 2 (Autumn 1994). “Externalities and Technology Transfer through Multinational Corporations. and the Transfer of Technology: A Simple Dynamic Model. Direct Foreign Investment.57 Over time. 193–194. . 2007.S. and Richard Freeman.55 Low living standards allow developing countries to engage in “cost innovation”—the production of hightechnology products at a fraction of the cost of technological leaders. Gerschenkron.S. Mass. 2008). 11457 (Cambridge. No. Vol. and Till Vestring. “The Globalization of R&D and Innovation: How Do Companies Choose Where to Build R&D Facilities?” testimony given to the Subcommittee on Technology and Innovation. 2007). ªrms from rich nations may have little choice but to outsource parts of their business to the developing world. Sanghamitra Das. No. Competition. “with lower costs and equivalent technology backward societies fre- 52.”53 Several conventionally accepted assumptions undergird this view. Vol. Bitzinger. 57. p.: National Bureau of Economic Research [NBER]. “Relative Backwardness. Philip Leung. 1–2 (February 1987). and Industrial Development in China.”52 Similarly. and Loren Brandt and Eric Thun. Ming Zeng and Peter J. 55. Pape.China’s Century? 51 Declinists associate globalization with diffusion. 29–36. 92. 54.: RAND. October 4. “Empire Falls.” and perhaps even “leap-frog” up the value chain.54 The second assumption is that economic backwardness is not a handicap. and Richard A. 26. Perspectives on U. “The Globalization of the Arms Industry: The Next Proliferation Challenge. Dragons at Your Door: How Chinese Cost Innovation Is Disrupting Global Competition (Boston: Harvard Business School Press. 2007). chap. Vol.” World Development. pp. which he calls “one of the largest relative declines in modern history. pp. Linsu Kim. No.W. 1555–1574.S. calculates that “just over half” of the United States’ relative decline from 2000 to 2008. Atkinson. Economic Backwardness in Historical Perspective. “The unipolar order of the last two decades is waning not because of Iraq but because of the broader diffusion of power across the world. Robert Pape. Fareed Zakaria. 43. 22. 170–198. No. 11 (November 2010). First. 56.56 To remain competitive. “The Fight for the Middle: Upgrading. “The Battle for China’s Good-Enough Market. Nos. pp.. Economic Leadership?” Working Paper. “Does Globalization of the Scientiªc/Engineering Workforce Threaten U. Ronald Findlay. for example. For an application of this argument to China. Calif. pp. House of Representatives. a strategy that further increases developing countries’ access to advanced technology.” Quarterly Journal of Economics. July 2005). Williamson. pp. Imitation to Innovation: The Dynamics of Korea’s Technological Learning (Boston: Harvard Business School. Vol. 171–182.” International Security.” resulted from “the spread of technology to the rest of the world. 80–89. pp.
Korea. pp.. 32. pp. In the past. The East Asian Miracle (Washington. Edward S. 154. 11 (April 2004). p. 171. 5732 (Cambridge.: NBER.” World Bank Economic Review. chap.International Security 36:3 52 quently can outcompete the more afºuent advanced society economically and militarily. foreign consumers. 60. Krueger.: Princeton University Press.: World Bank. Gilpin. Romain Wacziarg and Karen Horn Welch. 1993). 187–231.g. but these 58. Germany.. Steinfeld. The East Asian Development Experience (New York: Zed. thereby enabling a strategy of export-oriented growth. 6. Vol. Globalization has increased developing countries’ access to advanced technology. Cyrus. and Taiwan all became rich by selling their wares in foreign markets. Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization (Princeton.”63 The international trade regime affords poor countries some leeway to protect their infant industries. “Plant. 22.” in Ito Takatoshi and Krueger. however. 51–52.. November 2006). p. such protective barriers may no longer be available because “the world’s wealthiest countries—though hardly paragons of free trade—do not tolerate the sorts of protectionism they once did.” World Development. 112. p. The Rise of the Rest (New York: Oxford University Press. the United States. 2 (June 2008). . James R. See also Bitzinger “The Globalization of the Arms Industry”. No. “Economic Reform and the Process of Global Integration. Japan.59 Unemployment may rise as inefªcient ªrms are weeded out of the market. No.and Firm-Level Evidence on ‘New’ Trade Theories. “Trade Liberalization and Growth: New Evidence. pp.: World Bank. and Sacha et al. War and Change in World Politics. chaps.”62 In other words. eds. and Ha-Joon Chang. D. No. 2003).” in James Harrigan and Kwan Choi. “Growth before and after Trade Liberalization. David Romer.”58 Third. 1. 65. 61. eds. 185– 188. Growth Theories in Light of the East Asian Experience (Chicago: University of Chicago Press. allowing rising states (e. 62. Vol. 3.. “East Asian Experience and Endogenous Growth Theory. industries were mostly self-contained within countries. 31–45. 1981. D. but once again the declinist case tells only part of the story. 388– 415. “Trade and Growth in East Asian Countries: Cause and Effect?” Working Paper.J. N. 2006). Frankel. 2001). “China’s Shallow Integration: Networked Production and the New Challenges for Late Industrialization. and South Korea) to use targeted investment and trade barriers to cultivate internationally competitive industries. See also Robert Wade. but those that survive will become more efªcient and gain access to wealthy. Mass. China’s Rise.60 Declinists expect China to follow suit. and World Bank. xv–xlviii. 84. No. August 1996). Jeffrey A. 2003). 63. 1995). and Teresa L. Tybout. and Ataman Aksoy and Gonzalo Salinas. pp.61 Today. but it has also spawned a new mode of production— globally networked production—that may undercut their long-term technological development. 113. Handbook of International Trade (New York: Blackwell.” 59. some scholars assume that exposure to global competition provides beneªcial discipline for developing economies. 4062 (Washington. pp. There is much to these arguments. Japan.” Policy Research Working Paper. 179. Anne O.C. Alice H. Amsden.C. “[T]he conventional technological upgrading ladders have been kicked away in the [World Trade Organization] era. Ning.
83. 68. Alan M. Latecomers face pernicious competition not only from powerful incumbents but also from hordes of low-cost competitors from elsewhere in the developing world. July 2006).” Economics Study Area Working Papers. “Who Files? Developing Country Participation in GATT/WTO Adjudication. 2000). “China’s Leadership in the World ICT Industry. 334. 67. Joanne Gowa and Soo Yeon Kim. “An Exclusive Country Club: The Effects of the GATT on Trade. 1950–1994. “Technological Change and Opportunities for Development as a Moving Target. “Developing Country Use of the WTO Dispute Settlement System. 719–735. 2008).. No. Marc L. 4 (August 2003). 7. p. Mass. 3 (July 2009). and Gregory Shaffer. D’Cruz.S. pp. And because technology diffuses rapidly across borders. 57. No. No. Rugman and Joseph R. U.” CEPAL Review. Diffusion. No. U. No. Does Legal Capacity Matter?: Explaining Dispute Initiation and Antidumping Actions in the WTO. p.67 They have become “global ºagships.64 Lower trade barriers. 65. chap. 4 (Geneva: International Center for Trade and Sustainable Development. Busch and Eric Reinhardt. 75 (December 2001). ed. 71. high-quality manufacturing a widely available commodity. Vol. branding. the result is a global division of labor in which ªrms in developed states specialize in research and development (R&D). Davis and Sarah Blodgett. “Systems Integration: A Core Capability of the Modern Corporation. 1 (1995). “Innovation. No. 12385 (Cambridge.: NBER. No.” Paciªc Affairs. and Andrea Prencipe. 453–478.” Brookings Papers on Economic Activity. and marketing while outsourcing manufacturing and basic engineering to developing countries. Christina L. Issue Paper. Gregory Shaffer.” Working Paper. lead ªrms can discipline lower-tier partners and constrain their development. allow lead ªrms to “slice up the value-chain—to produce a good in a number of stages in a number of locations. 2009). Vol. Andrew Davies.”65 According to the alternative perspective. 109–130. Vol. 5 (2005). 1033–1049. 1995. Vol.” Journal of Politics.” Journal of World Trade. Paul Krugman. Lutao Ning.China’s Century? 53 countries generally lack the legal capacity necessary to take advantage of such provisions. and Mike Hobday. pp. companies reap “dynamic self-reinforcing competitive advantages. shop-ºoor innovations quickly spread from one manufacturer 64.” Industrial and Corporate Change. pp. Multinationals as Flagship Firms: Regional Business Networks (New York: Oxford University Press. 1 (Spring 2009). “The New Mobility of Knowledge: Digital Information Systems and Global Flagship Networks. coupled with advances in technology (particularly digitization). The globalization of production makes cheap. and Dieter Ernst. See also Carlota Perez. pp.” deriving power from their control over proprietary resources and their capacity to coordinate transactions among the various nodes of the production system.” World Politics. 56 (Honolulu: East-West Center.K. No. 66.68 By controlling integral technologies and standards. and Marc L. 1109–1143. 14. .” in James Hartigan. No. Jonathan Eaton and Samuel Kortum.66 By farming out production activities to the developing world. Busch. No. Vol. Vol. Trade Disputes and the Dispute Settlement Understanding of the WTO (Bingley.” tapping pools of cheap labor and investing the savings in technological modernization and rejuvenation. and Trade. “Developing Countries and GATT/WTO Dispute Settlement. 37. 4 (July 2005).: Emerald Group. 82. adding a little bit of value at each stage. Eric Reinhardt. 2003). “Growing World Trade: Causes and Consequences.
Vol. Handbook of Development Economics. eds. knowledge. Susanto Basu and David N. Richard Blundell. and Economic Growth. 22. “China’s Shallow Integration. however. see Eliot A. 2006). Bloom. For an application of this argument to militaries. Vol. 75. 73. “Distant Battles: Modern War in the Third World. Vol. . 8713 (Cambridge. 1 (March 1990).: NBER. proªt margins and time horizons shrink. 35. “The Economic Implications of Learning by Doing.”69 In theory. 2 (May 2005). 1 (June 1986). Hidden Liabilities. its efªcient judicial system. and command centers. 1025–1054. No. Vol. 4. 4 (November 1998). January 2002). No. Srinivasan. 37–55. Vol. and the skills. a U. Kling and Nick Schultz.. or “absorptive capacity.” Quarterly Journal of Economics. 113. 29.73 For example. pp. Westphal. Vol.” Quarterly Journal of Economics. Cummins Engine Company. 155–173. 157–210. In practice. Wesley M. 71. pp. Evenson and Larry E. Steinfeld. p. and the Lasting Triumph over Scarcity (New York: Encounter Books. Cohen. and Jaypee Sevilla. but many lack the supporting infrastructure. World Bank.International Security 36:3 54 to another. No. and Rachel Grifªth. p. “Absorptive Capacity: A New Perspective on Learning and Innovation.” Working Paper. and David E. Vol. 80 (June 1962).” Journal of Development Economics. Howard Pack and Larry E. No. No. 2 (March/April 1996). globalization should help developing countries obtain and absorb advanced technology.S. 1983. pp. No. No. Mass.. “Industrial Strategy and Technological Change: Theory versus Reality.: World Bank. pp. David Canning. Vol.” Review of Economic Studies. and trust embedded within its society. research clusters.72 Developing countries may be able to purchase or steal certain aspects of these systems from abroad. and Eliot A. pp. 128– 152. Economies and militaries used to consist primarily of physical goods (e.g. 72. Cohen. In response.70 The World Bank recently calculated that 80 percent of the wealth of the United States is made up of intangible assets. and Robert E. technological leader. Vol. its system of property rights. but today they are composed of systems that link physical goods to networks.” Foreign Affairs. Instead they exist in peoples’ minds and can be obtained only through “hands-on” experience.” p. Kenneth Arrow.” necessary to integrate them into functioning wholes. 164–166.N. pp. 1995). “Technological Diffusion. Levinthal. this may not occur because some of the knowledge and infrastructure necessary to absorb certain technologies cannot be speciªed in a blueprint or contained within a machine. D.71 If this is the case. Nick Bloom. “Appropriate Technology and Growth. “mastering open processes instead of developing proprietary ones. As competition rises. then a huge chunk of what separates the United States from China is not for sale and cannot be copied. “Technological Change and Technology Strategy. “Technological Accumulation and Industrial Growth: Contrasts between Developed and Developing Countries.C. pp. “A Revolution in Warfare. Cohen and Daniel A.” Industrial and Corporate Change. 87–128. most notably. Westphal. See also Martin Bell and Keith Pavitt. Conditional Convergence. No. 2009). 701–728. From Poverty to Prosperity: Intangible Assets. See also Phillippe Aghion. Weil. 2. Arnold S. Where Is the Wealth of Nations? Measuring Capital for the 21st Century (Washington. “Competition and Innovation: An Inverted-U Relationship. 3 (Amsterdam: Elsevier Science. No. formed joint ventures with a Japanese company and an Indian company to 69.” Administrative Science Quarterly. in the 1960s.” Jere Behrman and T.” International Security. ºedgling ªrms eschew long-term investments in R&D and instead focus on lowering costs in existing activities. 4 (Spring 1986). 10. 120. conveyor belts and tanks). 2 (1993). 70.
S.S. U. according to Jack Baranson. The Japanese plant quickly reached U. social networks. quality and cost levels while the Indian plant turned out second-rate engines at three to four times the cost.S. see Harry Eckstein “Case Study and Theory in Political Science. Base Structure Report 2009 (Washington. Jack Baranson.org/research/reports/2006/05/global-us-troop-deployment-19502005. On imports and exports. Paul M. 17. and Brian Pollins.org/. pp. . Friedman.76 If the United States has not declined relative to China during this period. On globalization. foreign countries hosting at least 100 American soldiers. steadily increasing its mass by soaking up ideas. Omar Keshk. Its property rights. N.: Princeton University Press. see KOF Index of Globalization. http:/ /www. The reason. On hegemony.S. see U. the United States is more like a sponge. capital markets. 1002– 1037. 76. see Katherine Barbieri. formal U. note that the number of U. 77.S. No. 5 (October 1986). 2. The Venturesome Economy: How Innovation Sustains Prosperity in a More Connected World (Princeton. economic system to a leaky bucket oozing innovations out into the international system. Troop Deployment Dataset. On alliances. Correlates of War Project Trade Data Set Codebook. 75. On foreign hosts of American soldiers. 1967). 2009). The Empirical Record For a theory to be useful. then declinism has failed a critical test and should be regarded as suspect. http:/ /www. Compared to developing countries such as China.ch/.China’s Century? 55 produce the same truck engine.75 Declinists liken the U. 80–81.C. and Thomas L. hegemony have expanded signiªcantly.” Journal of Political Economy. Over the last twenty years. Department of Defense. required to convert techniques and produce new technical drawings and manufacturing speciªcations. chap. imports and exports have all increased since 1989. Amar Bhidé.ethz.correlatesofwar. 58–59.kof. and people from the rest of the world. . Romer. pp.S. the United States is primed for technological absorption. 94. Vol.S. 2. and U. International Military Alliances. alliances.: Ofªce of the Deputy Under Secretary of Defense. see Tim Kane. On critical tests.S.heritage. On military bases. 2008). If this is the case. then the spread of technology around the globe may paradoxically favor a concentration of technological and military capabilities in the United States. technology. D.” in Fred . http:/ /globalization.J.: Syracuse University Press. signiªcant changes in the key independent variables should produce noticeable changes in the dependent variable. The Lexus and the Olive Tree (New York: First Anchor. bk. globalization and U. but also absorb innovations created elsewhere. N.”74 This case illustrates how an intangible factor such as skill can lead to signiªcant productivity differences even when two countries have access to identical hardware. memberships in international organizations. formal U. and legions of multinational companies not only help it innovate. was the “high degree of technical skill . ver. 2000). “Increasing Returns and Long-Run Growth.Y. But in the alternative perspective. see Gibler.77 Such a ªnding would also provide suggestive evidence in favor of the alternative per74. military bases. Manufacturing Problems in India: The Cummins Diesel Experience (Syracuse.S. ºexible labor laws.
78 How should the U.International Security 36:3 56 spective. hegemonic burdens increase. and conventional military capabilities.S. 1. How should national power be measured? In this article. 2000). Nye. . innovation.-China balance be measured? In 2000. 7: Strategies of Inquiry (Menlo Park. Innovative activity therefore tends to cluster in Greenstein and Nelson Polsby. Ashley J.: Addison-Wesley. the RAND Corporation conducted a comprehensive review of studies on national power and concluded that three interrelated sets of resources are most vital in international politics: wealth. Tellis. which can sustain signiªcant investments in innovation and military power with a relatively small percentage of their total resources. but possessing these resources certainly helps. however. Calif. Robert O. innovative countries are less dependent on others and more capable of producing goods that others value. As Robert Keohane and Joseph Nye point out. and whether these resources produce desired outcomes depends on the context and manner in which they are employed. Nye.S. All states face the dilemma of balancing short-term spending against long-term economic growth. deªned as the creation of new products and methods of production. The analyses that follow cannot rule out the latter possibility. Instead they merely constitute a ªrst-cut test of declinism’s fundamental claim that the United States declines as globalization and U. The ability to innovate. Like wealthy states. 79. chap. Resources. though conªrmation of the speciªc hypotheses discussed above requires more detailed analyses. Christopher Layne. also constitutes a source of power.. Power and Interdependence (Boston: Little. If the United States has maintained its lead over China. They also have more capital to fund technological innovation and military modernization. Calif. power is deªned in terms of resources rather than inºuence. 79–137. 78.: RAND. is less acute for wealthy states. The Handbook of Political Science. Measuring National Power in the Postindustrial Age (Santa Monica. 80.79 Wealth functions as a source of power because it insulates a state from dependence on others and provides things of value that can be used in bargaining situations. it may have done so because of hegemony and globalization. Keohane and Joseph S. pp. and Melissa McPherson. This predicament. are simply the raw materials that underlie power relationships. 1975). Janice Bially. As Nye explains. of course. economic interdependence involves relations of asymmetric vulnerability. so it is important to ªgure out who has what. Brown. The Future of Power. Innovation also creates wealth and tends to beget further innovation as individual discoveries spawn multiple derivative products and improvements. Vol.80 Wealthy states are better equipped to wield market access and economic sanctions as tools of inºuence over others. 1977). the poker player with the best cards or the most chips does not necessarily win every hand. eds. or in spite of them.
In the analyses that follow. Thus. “The country creating a major cluster of innovations often ªnds immediate military applications and both propels itself to hegemonic status and maintains that status by that mechanism. responsiveness and credibility. 43. “From Hegemony to Competition: Cycles of the Core?” in Terrence K. Calif. 1980). When performed well. . Moreover. which allows 81. Vol. The authors of the RAND study explain: “Even though nuclear weapons have become the ultima ratio regum in international politics. The RAND study found that nuclear weapons were of less importance than conventional capabilities for national inºuence. to back up coercive threats. 1 (February 2010). Goldstein. In a separate study. “Economic Development and Military Effectiveness.”82 The key point is that national power is multifaceted and cannot be measured with a single or a handful of metrics. 140. p. Hopkins and Immanuel Wallerstein..” Journal of Strategic Studies. Military capabilities can be used to destroy. Long Cycles: Prosperity and War in the Modern Age (New Haven. and Relative Decline. and William R. Military superiority can also generate wealth by.China’s Century? 57 particular places and provide certain countries with signiªcant technological and military advantages. International relations scholars tend to view civilian and military realms as separate entities. 201–233. 83. Thompson. Processes of the World-System (Beverly Hills. Amos Perlmutter Prize Essay. 82. This is not because economic power is necessarily more important than military power. 33. Technological Innovation. Vol. pp. for example. their relative inefªcacy in most situations other than those involving national survival implies that their utility will continue to be signiªcant but highly restricted. As Joshua Goldstein has shown. I allot more space to economic indicators than to military indicators. decline. not military. See also Nicole Bousquet. No. making a country a more secure and attractive place to invest. p. Michael Beckley. military power is ultimately based on economic strength. but rather because most declinist writings argue that the United States is in economic. ºexibility. 43–79. Ibid. therefore.. The ability to conduct different and sophisticated forms of conventional warfare will. I show that countries that excel in producing commercial products and innovations also tend to excel in producing military force.: Yale University Press. 44. I do not consider them in the following analyses. Conn. 1988). eds.83 Part of this advantage stems from greater surplus wealth. “Long Waves. and to provide protection and assistance. Joshua S.” International Organization. remain the critical index of national power because of its undiminished utility. but militaries are embedded within economic systems. pp. No.”81 Military power is generally considered to be the “ultima ratio” of power because it functions as a decisive arbiter of disputes when it is used and shapes outcomes among states even when it is not. these actions can alter the behavior of other states. as well as provide the means to coerce other countries into making economic concessions. 2 (Spring 1990).: Sage.
Focusing on the former. also derive military beneªts from their technological infrastructures. which was the highest in the world and several times higher than China’s and India’s at the time. Robert Fogel. September 2005. 1–2008AD. China was the largest economy in the world throughout most of its “century of humiliation. This dominance stemmed not from the absolute size of Britain’s economy. let alone entering the ranks of the great pow84. 61 (Washington. see Angus Maddison. and Jim O’Neil and Anna Stupnytska. advanced data analysis networks. 86. No. Economically developed states. even at its peak. acquiring Hong Kong and various other concessions. stocks of managerial expertise.” Foreign Policy. however. 87.C. D. however. was able to establish imperial control over India and to defeat China militarily. 2008). 177 (January/February 2010).” 2009.International Security 36:3 58 rich states to sustain large military investments. economic indicators are. Chestnut and Johnston. measured in terms of per capita income. measures of military capability. Over the last twenty years.net/MADDISON/oriindex. and Per Capita GDP. Economist Intelligence Unit.ggdc. The Long-Term Outlook for the BRICs and N-11.85 Economic size. Post Crisis Global Economics Paper. most projections have China overtaking the United States as the world’s largest economy before 2050. on the other hand.” when it was ripped apart by Western powers and Japan.000. See. Policy Brief. “Is China Rising?”. “$123. but its tiny population precludes it from raising a meaningful army. but from its superior level of economic development. China Rising: Fact and Fiction. After all. Statistics on World Population. imposing unequal treaties on Beijing. the largest economy in the world. The United Kingdom. GDP.86 Britain. “All Country Data Set. Britain’s GDP was far smaller than China’s and India’s for all of the eighteenth century and much of the nineteenth century. In short. China’s GDP has risen relative to the United States’ in terms of purchasing power parity (PPP). therefore. Luxembourg’s per capita income is almost double that of the United States.: Carnegie Endowment for International Peace.htm. to a signiªcant degree. efªcient production capacities. 192 (December 2009). http:/ /www. No. pp. and some as early as 2015. and Albert Keidel. No. does not necessarily make China a contender for superpower status. wealth The case for the decline of the United States and the rise of China rests heavily on a single statistic: GDP. 71–75. ruled a quarter of the globe for more than a century.84 Regardless of which measure is used. Ibid. but was never. and establishing a sphere of inºuence in East Asia. Cooper.87 This is not to say that size is irrelevant. however. though it has declined in real terms. does not imply ignoring the latter. .000. “Whither China?” Japan Center for Economic Research Bulletin. Some scholars claim that projections of GDP growth from a PPP base exaggerate China’s future economic size. For historical GDP data.000. See Richard N. 85. for example.000. and stable political environments. however.
S. PPP stands for purchasing power parity. October 2010. The War Potential of Nations (Princeton. but “surplus wealth.”88 It is therefore signiªcant that the average Chinese citizen is more than $17.: CBO. but most of it will be immediately consumed.: Princeton University Press. 1956). policymakers will be forced to either decrease public spending or allow interest costs on the national debt to rise ruinously. .89 In the coming years. D. As Klaus Knorr argued. Managing such high levels of debt will be especially difªcult if the 88. 1991–2010 ($ in current prices) SOURCE: International Monetary Fund. U. On the other hand. the United States’ public debt will remain greater than 60 percent of GDP through 2020. According to the Congressional Budget Ofªce. however. It is. the United States has accumulated great wealth in part by borrowing from abroad at an unprecedented rate. 89. Either option will retard economic growth.C. Congressional Budget Ofªce (CBO). leaving little left over for national purposes. 231–239. World Economic Outlook Database.China’s Century? 59 Figure 1. and that countries with larger economies do not necessarily have more resources at their disposal. Klaus Knorr. The Budget and Economic Outlook: An Update (Washington. pp. what matters for national power is not wealth. N. important to recognize that GDP is not synonymous with national power. Half a billion peasants will produce a large volume of output. ers. Per Capita Income.J.000 poorer relative to the average American than he was in 1991 (see ªgure 1). August 2011).
see Minxin Pei and Jonathan Anderson. Howie. “No One Home.” Financial Times. June 25. is that several factors that allowed for rapid Chinese growth (e. and David Barboza.” National Interest. Estimates that take this spending into account put China’s debt-to-GDP ratio between 75 and 150 percent..” New York Times. see Hellener and Kirshner. 2010. “Serious. 2009.90 At ªrst glance.95 Chief among these factors is China’s “demographic dividend. a surplus of cheap labor and capital.C. however. The Chinese economy grew 8 percent annually throughout the global ªnancial crisis. Feng Wang. 91. “China’s Population Destiny: The Looming Crisis. New America Foundation. July 6. see “China’s Debt Monster.” National Interest. December 19. Victor Shih. Andrew Batson. 92. July 7..g.000. 96.T.” New York Times. D. Yang Yao. “Contrarian Investor Sees Economic Crash in China. an outcome that some experts think is likely. See also “Rogoff Says China Crisis May Trigger Regional Slump.International Security 36:3 60 dollar loses its position as the international reserve currency. and Fogel.com/roomfordebate/2011/07/06/chinas-debtmonster. June 28.” Current History. “Stimulus Dilemma for China. Babones. September 2010. 2011). 2011. July 18. 2011. “China’s Hidden Debt Risks 2012 Crisis. World Economic Outlook Database.org/external/ ns/cs. Shuanglin Lin. “Emphasis on Explicit Debt Hides Extent of Beijing’s Local Liabilities. 2010.” Wall Street Journal. pp. The Future of the Dollar. San Diego. 2010. “Moody’s Sees Much Bigger Local Debt in China. but Not Devastating. “Chinese Growth in 2011. http:/ /www. No.” Bloomberg News.000. February 22. see Jonathan Anderson. 19–32. and sufªcient water supplies) are disappearing. http:/ /www.” China Financial Markets. 244–251. 2010.” Wall Street Journal Asia. January 7. David O. 2010. N. “$123. For a balanced debate among seven experts on this topic. is likely much higher than reported because a great deal of state spending is funneled through investment entities connected to local governments.nytimes. 2010. 2011. February 9. 2011. March 1.” Financial Times. 94.”96 In the 1950s and 90.92 The Chinese government projects annual growth rates of 7 percent between now and 2030.” paper presented to the World Economic Roundtable. “The Future of Chinese Growth.94 What is more certain. No. pp. and Simon Rabinovitch. 100 (March/April 2009).” Bloomberg News. 100 (March/April 2009). and Michael Pettis. “Beijing’s Exceptionalism. February 24. Barry Naughton. pp. 2011.”93 These predictions are speculative and may turn out to be overly pessimistic. 93.J. For a debate on the future of Chinese growth.000 Credit Risks. China’s ªscal future appears much brighter than the United States’. For a balanced assessment on this issue.91 China’s true level of public debt. Some prominent investors and economists. Beim. March 21. July 5. 2011.000. March 2. “The Investment Will Pay Off. however. and its reported debt-to-GDP ratio is only 19 percent. “Five Reasons China Is at the Peak of Its Growth Potential. expanding export markets abroad. “The Color of China. On the argument that China will continue to grow rapidly. International Monetary Fund.: John Wiley and Sons. Geoff Dyer. Red Capitalism: The Fragile Foundation of China’s Extraordinary Rise (Hoboken.” presentation at the Summer Training Workshop on the Relationship between National Security and Technology in China.000. Washington.” New York Times. believe Chinese growth will plunge to 2 to 5 percent within the next decade following the collapse of a “debt-fueled bubble.” New York Times.” New York Times.” 95. Walter and Fraser J. “The Middling Kingdom”. Carl E. “China’s 8. University of California. however. 2010.imf. 13–32. . Northwestern’s Shih Says.aspx?id 28.
As a result. China will soon confront the most severe aging process in human history.. http:/ /esa. 111. its pension system is better funded. 100.China’s Century? 61 Figure 2.un. January 2006. 2010). No. “How to Think about China. . In the 1970s. the Chinese government encouraged Chinese women to bear multiple children to boost the working-age population. 3 (Summer 2008). and Sustainability. causing the ratio of workers per retiree to plummet from 8 to 1 today to 2 to 1 by 2040. World Population Prospects: The 2008 Revision Population Database (New York: United Nations. Demography. its public welfare commitments more modest. “can be said to be a young and even a developing country. “Global Imbalances: Globalization.100 Moreover. United Nations.org/unpp/. World Population Prospects: The 2008 Revision Population Database (New York: United Nations. Cooper. p. Ibid. 22. Jonathan Anderson. Working Age and Dependent Populations. 1990–2050 SOURCE: United Nations. Within twenty years. 2010).97 The ªscal cost of this swing in dependency ratios may exceed 80 to 100 percent of China’s GDP. 98. 2. pp. Vol. by contrast.” Journal of Economic Perspectives. and its citizens more productive (in 97. 26–28. the Chinese government reversed course and instituted the one-child policy.98 The United States.”99 Its working age population will grow by 17 percent over the next forty years while that of all the other major powers (except India) will decline (see ªgure 2). 1960s. Richard N. China will have 300 million pensioners. 99. chap.” UBS Investment Research. however.
but deepen it as . The Chinese market is much larger than it used to be. James Kynge. 2006). 113. Chang. pp. Power in a World of Aging Populations. Vol. and Your Job (Upper Saddle River.S. 1998). “is therefore not only likely to extend U. p. other states are likely to fall even farther behind. the United States is now wealthier compared to China than it was in 1991. “Inevitable Superpower. and Manuel R.S. East Asian Development Experience. 33. See also Richard Jackson. 149–162.S. pp. however. Kim. No. . unlike joint ventures.105 Wholly foreign-owned enterprises now account for 70 percent of foreign direct investment (FDI) ºowing into China. 32. 2010).” 104. “Foreign Investment in Developing Countries: Does It Crowd In Domestic Investment?” Oxford Development Studies. 22. 102. 2010).106 In sum. Vol. Agosin and Ricardo Mayer. Yasheng Huang. pp. Imitation to Innovation.103 The fundamental assumption behind this claim is that a nation’s GDP reºects the size of its domestic market. and Subramanian. 206. 105. 112. Mark L. but they consume relatively few. chap.C. Market size.: Wharton School.”102 Declinists claim that a rising GDP helps China attract foreign investment and compel foreign ªrms to transfer advanced technology to Chinese enterprises. 2006). the Balance of Power. 66–68. hegemony . is a measure of consumption whereas GDP is a measure of production. N. “Bargaining Power and Foreign Direct Investment in China: Can 1. China’s bargaining power vis-à-vis foreign ªrms seems to be waning. . When China Rules the World. No. are generally under no obligation to transfer technology to local partners and may crowd domestic ªrms out of the market. No. Elissa Braunstein and Gerald Epstein. “The Aging of China. 2. pp. 106. Ibid.104 More important. 29. The Chinese Century: The Rising Chinese Economy and Its Impact on the Global Economy. World Trade Organization Statistics Database. D. 122. pp. Haas.3 Billion Consumers Tame the Multinationals?” Working Paper. 140. Oded Shenkar. 1. 108–110. Playing Our Game: Why China’s Economic Rise Doesn’t Threaten the West (New York: Oxford University Press.J. “A Geriatric Peace? The Future of U. China Shakes the World: A Titan’s Rise and Troubled Future—and the Challenge for America (Boston: Houghton Mifºin..: Center for Strategic and International Studies. 1 (Summer 2007). 103.101 “Global aging. 138–140. Vol. . This prediction runs counter to declinism and provides suggestive sup101. 174. pp. Edward S.” Mark Haas writes. 67–84. chap. China’s citizens produce many goods. 13 (New York: Center for Economic Policy Analysis. April 20. August 2002). 95. Steinfeld. pp.International Security 36:3 62 terms of hours worked and years employed) than any other major power.” International Security. 2 (June 2005). . 1 (February 2003). FDI in China: An Asian Perspective (Singapore: Institute of Southeast Asian Studies. market over the last two decades: China now imports less compared to the United States than it did in 1991. Such rampant foreign ownership never occurred in past cases of successful technological development (Japan and Korea grew with almost zero FDI or foreign ownership) and with good reason: wholly foreign-owned enterprises. whereas joint ventures between foreign and Chinese ªrms have steadily declined (see ªgure 3). but it has shrunk relative to the U. Jacques.” Critical Questions (Washington. Koen de Backer and Leo Sleuwaegen. No. “Does Foreign Direct Investment Crowd Out Domestic Entrepreneurship?” Review of Industrial Organization. .
China’s Century? 63 Figure 3. the relative rates of innovation in each country. Such an outcome will depend on. . German chemical ªrms typically employed ªfty to seventy researchers. 2007).S.ucsd. in which large populous developing countries employ enough scientists and engineers to compete with the advanced countries in the hightech vanguard sectors. The trends discussed above may change. For a review of recent studies that make these claims.”107 Some analysts compare China with nineteenthcentury Germany. see Galama and Hosek. which surged ahead of Britain by training massive numbers of scientists and engineers. “Does Globalization of the Scientiªc/Engineering Workforce Threaten U. The Chinese Economy: Transitions and Growth (Cambridge. among other things. Competitiveness in Science and Technology. chap.: MIT Press.” http://irps.S. I thank an anonymous reviewer for pointing this out. Modes of FDI in China. by 1900. allowing them to conduct 107. Freeman. and “Chapter by Chapter: Data and Supplementary Materials. port for the alternative perspective. Mass. U. Economic Leadership?” pp. 108.edu/faculty/faculty-publications/chinese-economy/chapter-bychapter-data-supplementary-materials/. innovation Declinists claim the United States produces too few scientists and engineers (and too many lawyers and bankers) while China engages in “human-resource leapfrogging. and historians may one day look back on the recent ªnancial crisis as the beginning of a massive transfer of wealth and power from the United States to China. 1. 20–21.108 For example. 1979–2009 (%) SOURCES: Barry Naughton. 17. chap.
employing more scientists and engineers than any other country and tripling its share of world scientiªc articles over the last ten years (from 2 percent to 6 percent). Evidence to date suggests China tends to prioritize the former at the expense of the latter. National Science Board. Bruce Einhorn. Va. pp.” December 2005. March 17. . it is the law: the Chinese government has decreed that.” Asia Policy. “Outsourcing Fears Help Inºate Some Numbers. and Carl Bialik. 2006–2020 [National medium. 1917). Science and Engineering Indicators 2008 (Arlington. 2006.110 There are.and long-term science and technology development program outline. http:/ /www. and still accounts for 50 percent of the world’s most highly cited scientiªc articles. Henri Hauser.wsj.00. February 9. see National Science Board. imperial Germany coupled size with sophistication. 112. by 2020. will not necessarily turn China into an innovation powerhouse. appendix table 5-38. State Council of the People’s Republic of China. 4 (July 2007). R&D expenditures will constitute 2. data on China’s R&D spending are inºated because they are based on the real purchasing power of the Chinese yuan even though most research equipment is purchased on international markets.edu/File. pp. http:/ /online.109 Today. See also Hao Xin and Gong Yidong. 115.html?mod COLUMN. producing not only many scientists but also world-class research. China seems poised for scientiªc dominance. ofªcial Chinese statistics overstate the volume of China’s scientiªc resources. “Is OECD Hyping China’s R&D Spending?” Business Week.. “China’s Fifteen-Year Plan for Science and Technology: An Assessment. the United States increased its lead in terms of R&D spending over the last twenty years (see ªgure 4).: National Science Foundation.113 Over the next few decades.5 percent of GDP and China will rank among the top ªve countries in terms of scientiªc article output. No. “China Bets on Big Science. August 26. however. 2008).com/blogs/eyeonasia/archives/2006/12/is_oecd_hyping_chinas_rd _spending. In fact. 2006. For data on scientists and scientiªc journal articles.111 In addition.114 Topdown decrees and resource infusions. 1548–1549. 113.112 Nevertheless. the United States’ share declined from 34 percent to 28 percent. however. Germany’s Commercial Grip on the World (New York: Scribner. “Framing the Engineering Outsourcing Debate: Placing the United States on a Level Playing Field with China and India. 114. Over the same time period.International Security 36:3 64 R&D while expecting to discard 90 percent of the results. December 7. 40–41.115 After all. For starters.aspx?id 10287. for 109. 135–164. Chinese scientiªc research will increase signiªcantly.html. 2006–2020].SB11248899277 8121801. The rush to increase the quantity of Chinese scientists. http:/ / www. Science and Engineering Indicators 2010 (Arlington. For a critical assessment of China’s science and technology plan.nae. 110. pp. Half of China’s “engineers” are auto mechanics or graduates of two-year vocational programs (zhuanke). 2005. reasons to question comparisons between imperial Germany and contemporary China.businessweek.com/article/1. Guojia zhongchangji kexue fazhan guihua gangyao.” Science. 2007. Va. 111. see Sylvia Schwaag Serger and Magnus Breidne.” Wall Street Journal.: National Science Foundation. 2010). Gary Gerefª and Vivek Wadhwa.
and Paul Mooney. 12 (December 2006). 88. “Corruption in China’s Higher Education: A Malignant Tumor. http:/ /www. No. 117. Richard P. Rui Yang. p. No. chap.com/node/6941786.economist. Total Research and Development Spending. May 29. Chinese Academia Ghost-Writing ‘Widespread. pp.” Nature Medicine. 2006.’” BBC. 12. “Science Friction. millions) SOURCE: OECD Main Science and Technology Indicators. 18–20. 8 (August 2006). Vol. are tempted to fake results or copy the works of others. Zhu Zhe. pp.” International Higher Education. . Simon and Cao. Cheol-Sung Lee and Andrew Schrank. See also Mu-Min Poo. January 5.” Economist.” and as a result. Spring 2005. 40. 3 (March 2010). 1231–1255. Vol. and Denis Fred Simon. “China’s 15-Year Science and Technology Plan. 867. May 18.China’s Century? 65 Figure 4. Suttmeier. 45–46. May 19.businessweek. PPP stands for purchasing power parity.” Physics Today. as evidenced by sharp declines in teacher-student and funding-per-student ratios. March 15. “Plagued by Plagarism. “Plagarism.com/magazine/ content/06_22/b3986077. 118. Cong Cao. 2006. 4. “Incubating Innovation or Cultivating Corruption?” Social Forces. 59. p.”117 Chinese scientists are “preoccupied with quick outcomes and immediate returns. No. pp. under intense pressure to produce.” China Daily.” Business Week. http:/ /www .” Chronicle of Higher Education. China’s Emerging Technological Edge. Heping Jian.116 Moreover. 2010. China’s determination to boost its article output has fostered “a Wild West climate where top researchers. has reduced the quality of their education. example. Fake Research Plague Academia. 2006. “quantitative gains in Chinese research productivity have not always been matched by qualitative gains.”118 According to a former Chinese biochemist turned whistle- 116. 2006.htm. Vol. “Frequent Cases Force China to Face Up to Scientiªc Fraud. 1991–2008 (current PPP $. See also “Faking It.
63– 76. China’s Emerging Technological Edge: Assessing the Role of HighEnd Talent (New York: Cambridge University Press. with minor new contributions. “China’s Fifteen-Year Plan. 1780–1914 (New York: Longman. A study by the London-based Times Higher Educational Supplement says the United States is home to ªfteen of the top twenty universities in the world. March 11. Society. German universities ranked among the best in the world and attracted talent from abroad. “China’s 15-Year Science and Technology Plan.uk. For data on the stay rates of Chinese students. C.” Foreign Affairs.” Nature. Freeman. China’s Emerging Technological Edge.S. “Stay Rates of Foreign Doctorate Recipients from U.” 119. Finn. the United States still dominates higher education. On the argument that Chinese students that come to the United States are China’s top students. McClelland. 125. Levin. and Clive Trebilock. currently suffers from a massive brain-drain problem. Economic Leadership?” p. The Industrialization of the Continental Powers. http:/ /www. a signiªcant portion of new R&D spending has simply disappeared because China’s Ministry of Science and Technology lacks the capacity to monitor the ºood of new research grants. 2004.International Security 36:3 66 blower. 7–8.127 Accord“Cultural Reºections. 25. 3 (May/June 2010). 6. Vol. 89. pp. 124. . see Simon and Cao. “Does Globalization of the Scientiªc Engineering Workforce Threaten U. “Times Higher Education-QS World University Rankings.S. and Simon. 204–205. Universities.”121 In the late 1800s. 123. Suttmeier. Open Doors: Report on International Educational Exchange. 1981). 2010–2011.S.org/en/Research-and-Publications/Open-Doors/Data/Fact-Sheetsby-Country.” http:/ /www . 122. chap. technological leadership. the result of all these deªciencies is that “much of the work coming out of Chinese laboratories and research institutes still tends to be not yet close to the cutting edge or to be derivative of what has been done elsewhere. The number of Chinese students enrolled in universities in the United States increased by an average of 9 percent annually between 1996 and 2011 and 20 percent annually between 2007 and 2011.E. by contrast. pp.126 At present. 2007. Simon and Cong Cao.co.125 China’s government recently announced its intention to develop a set of world-class universities to attract young talent from around the world. 62–67. State.” 120. see Michael G. Quoted in.”124 But 90 percent of the Chinese students who received a science or engineering Ph. No. 127. Richard C. “Misconduct is so widespread among Chinese academics that they have almost become used to it.D. 2009). 2011.”119 Indeed.123 Declinists assume these students return to China after graduating and therefore “threaten U. Cao. from an American university between 1987 and 2007 joined the American workforce. “Top of the Class. however.timeshighereducation.” Oak Ridge Institute for Science and Education. International Institute of Higher Education.” 121. 2010.120 According to the most comprehensive study on Chinese scientiªc research. 103. pp. and these students were typically China’s best and brightest. Denis F. and Serger and Breidne. 1980). 126. chaps. p. 1700–1914 (New York: Cambridge University Press.iie.122 China. “Science Friction. and University in Germany.
chap.jsp. 158–186. Chemicals and Long-Term Economic Growth (New York: Wiley. . 5–49.T. Institute of Higher Education of Shanghai Jiao Tong University. 1985). German scientists excelled at turning scientiªc breakthroughs into practical products. 1–19. and Simon and Cao. The Rise and Fall of the Great Powers. developing major innovations in the chemical. Lan Xue. p. electrical. May 2007). and Tom Kemp. pp. chap.arwu.. London School of Economics. 5 (September 2006). 1998). Measuring National Power in the Postindustrial Age. 14–15. the United States has either thirty-three or ªfty-four depending on which survey is consulted. Nick Bloom. 131. 4.” Comparative Technology Transfer and Society. p. that China is catching up to the United States in terms of basic scientiªc research. chap. During. chap. 788 (London: Center for Economic Performance. Better: U. After all. 3. “On the Making of Competitive Advantage: The Development of the Chemical Industries in Britain and Germany since 1850. 6. The Emerging Chinese Advanced Technology Superstate (Arlington. the United States has seventeen of the top twenty.S.” Economic Policy (January 2008). Vol. “What’s So Special about China’s Exports?” China and World Economy. such a trend would not necessarily affect the balance of power.129 In the nineteenth century.131 Thus. Ralph Landau. “Academic Ranking of World Universities. see Kennedy.. 22. Among the top 100 universities in the world. Vol.”130 Today. Va. and Peter K.” Nature.”133 perhaps even “the world’s 128. Multinationals and the Productivity Miracle. 14. China’s Emerging Technological Edge. “The Relative Sophistication of China’s Exports. 2 (August 2005). Preeg.China’s Century? 67 ing to a study by China’s Jiao Tong University in Shanghai. No. On the chemical industry.” in Ashish Arora. Raffaella Sadun.” http:/ /www. 133. July 2008.” Discussion Paper. China has two or zero. 1990).: Manufactures Alliance/MAPI. No. See also Dani Rodrick. Haber. scientiªc superiority is not necessary for technological superiority because published articles circulate globally—they sit in searchable databases and can be obtained by anyone with access to a major library—and it is insufªcient because most scientiªc breakthroughs are useless in isolation from lower-level innovations and infrastructure. China’s emergence as the world’s leading exporter of hightechnology products suggests it has capitalized on its scientiªc investments and become an “advanced-technology superstate. “Americans Do I. Hughill and Veit Bachmann. On the electrical and industrial dye industries. 129. Schott. Industrialization in Nineteenth-Century Europe (New York: Longman. The Lever of Riches (New York: Oxford University Press. 2008). 130. No. 1958). 2. and industrial dye industries that formed what many scholars now refer to as the “second industrial revolution. Ernest H. the ability to produce scientiªc breakthroughs may be less important than the ability to capitalize on them. Tellis et al. The Chemical Industry during the Nineteenth Century (Oxford: Oxford University Press.org/ARWU2010. Joel Mokyr. and Johann Peter Murmann and Ralph Landau. eds. and Nathan Rosenberg. Bhidé. pp.132 On ªrst glance. 211. Venturesome Economy.F. and John Van Reenan. 398–401. pp. The Industrialization of the Continental Powers¸1780–1914. Peter J. therefore. pp. 2.128 It is far from clear. 132. More important. See also Trebilock. see L. “The Route to the Techno-Industrial World Economy and the Transfer of German Organic Chemistry to America Before. what ultimately matters is not scientiªc superiority but technological superiority—the ability to produce and use commercially viable and militarily relevant innovations. and Immediately After World War I. pp. “China: The Prizes and Pitfalls of Progress.
Zhi Wang. Daniel H. Composition of China’s Exports.-China Trade in Advanced Technology Products. Zhi Wang.ucsd. J. and Xiao-Yin Jin. See also Michael J.” Comparative Economic Studies. 2009 (Beijing: Ministry of Science and Technology. Porter. 135. 1991–2009 (%) SOURCES: On high-technology exports. Nils C. 4628 (Washington.” Policy Research Working Paper. pp. Rosen. By comparison. 2 (2009).International Security 36:3 68 Figure 5. 207–224. China Science and Technology Statistics Data Book.” China Economic Quarterly Q4 (July 2004). Vol. 52 (June 2010). “Low-Tech Bed. Moreover. and Falan Yinug. “International High-Tech Competitiveness: Does China Rank #1?” Technology Analysis and Strategic Management.” Comparative Economic Studies. chap. David M. Ferrantino. 207–224. “The Nature of U. Alan L. 2007).htm. Robert B. pp. Ministry of Science and Technology of the People’s Republic of China (PRC).” http://irps. however. High-Tech Dreams. a trend that suggests Chinese ªrms are falling further behind foreign competitors.S. pp. 21. “An Anatomy of China’s Export Growth. The Chinese Economy: Transitions and Growth (Cambridge. D. 52 (June 2010). Robert B. No. a practice known as “export processing.edu/faculty/faculty-research-projects/chinese-economy/chapter-bychapter/chapter-17. approximately 50 percent of China’s total exports are produced by foreign enterprises (see ªgure 5).S. and not very high-tech”—more than 90 percent are produced by foreign ªrms and consist of imported components that are merely assembled in China.: World Bank. Vol. see Barry Naughton. PRC. Koopman. foreign en134.C. Mary Amiti and Caroline Freund. and Falan Yinug. 17. Koopman. Vol. 2009). On total exports. “The Nature of U. pp.”134 On closer inspection. Johnson. Newman. Mass: MIT Press.-China Trade in Advanced Technology Products. and “Chapter by Chapter: Data and Supplementary Materials. David Roessner. see Michael J. No. Ferrantino.”135 These percentages have increased over time. May . 20–27. 173–193. it becomes clear that China’s high-technology exports are “not very Chinese. leading technology-based economy.
Fung. 136. “Measuring the Vertical Specialization in Chinese Trade. new products account for 35 to 40 percent of sales revenue. Gilboy. “How Much of Chinese Exports Is Really Made in China? Assessing Domestic Value-Added When Processing Trade Is Pervasive. From 1991 to 2008. 2007-01-A (Washington. terprises produced less than 25 percent of Taiwan and South Korea’s manufactured exports in the 1970s. No. and Robert Koopman. K.136 Chinese technological stagnation is also evident in sales and patent statistics. Chinese ªrms’ sales of new products as a share of total sales revenues remained ºat at 15 percent.: U. Vol.138 The Chinese government grants the majority of its invention patents to foreign ªrms even though Chinese ªrms are ªve times more numerous. Zhi Wang. 138. George J. D. 14109 (Washington. pp. “The Myth Behind China’s Miracle. . p. 46. Gilboy. No. 83. 137. Dean. 1991–2008 SOURCE: OECD Main Science and Technology Indicators. 4 (July/ August 2004). D. 270.C. Judith M. Instead they seek “triadic patents. 139.China’s Century? 69 Figure 6. p. 2010). Zhongguo keji tongji nianjian 2009 [China statistical yearbook on science and technology 2009] (Beijing: China Bureau of Statistics. International Trade Commission. No.: NBER.” Foreign Affairs.137 In the United States. June 2008). 94–95. January 2007).” Ofªce of Economics Working Paper.” p. by contrast. and Zhi Wang. Shang-Jin Wei.C. 38.S.” which are simultaneously recognized by the patent ofªces of the three largest markets for high-technology products 2008).C. Zhongguo keji tongji nianjian 2009.139 This result is all the more startling because many foreign ªrms do not seek Chinese patents. Triadic Patents.” Working Paper. “The Myth Behind China’s Miracle.
see National Science Board.140 Between 1995 and 2008. 70. and Michael Horowitz. the United States accounts for 41. This fraction increased recently from 4 percent to 25 percent. 144. 2010). Industrial Research and Development Information System. the United Kingdom. but it remains far lower than the 200 to 300 percent spent by Korean and Japanese ªrms when they were trying to catch up to the West in the 1970s. U. It has more nanotechnology centers than the next three nations combined (Germany. and Industry Scoreboard 2009 (Washington. Christensen. D.C. Chinese ªrms. OECD Science. lead in triadic patents has increased over the last twenty years. 146. see ibid. See also Clayton M. Technology and Industry Scorecard 2009. Zhongguo keji tongji nianjian 2009. N.S. see Zhongguo keji tongji nianjian 2009. and waste management technologies. 142. and the share of Chinese ªrms with an R&D department declined from 60 percent to 24 percent.: Princeton University Press.” p. and are thus the most secure and most difªcult to obtain. 7. The Post-American World. looks set to excel in emerging high-technology industries.J. and China) and accounts for 43 percent of the world’s nanotechnology patent applications (see ªgure 7). 53.5 percent of patent applications (China accounts for 1. 94–95. On Korean and Japanese ªrms. p. however. 71. “The Myth Behind China’s Miracle. pp. the United States has increased its lead in patent applications over China in all of these industries. Gilpin. For the past twenty years. 96–97. water pollution.S. 143. . 145. The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (Boston: Harvard Business School Press. On Chinese ªrms.144 In biotechnology. Science and Technology Indicators 2010. chap. China accounts for 1 to 4 percent of the patent applications in these areas (see ªgure 8).”143 The United States. 2009). pp. Organization for Economic Cooperation and Development (OECD).S.International Security 36:3 70 (the United States. 140. Zakaria. p. and Japan).146 Since 1991. The Diffusion of Military Power: Causes and Consequences for International Politics (Princeton.142 Technological leaders sometimes rest on their laurels and abandon innovative efforts in favor of “ªnding new markets for old products. they spend a fraction of the total cost on absorbing the technology. Figure 6 shows that the U. For U. the share of Chinese enterprises engaged in scientiªc or technological activities declined from 59 percent to 37 percent. 141. Chinese ªrms’ total spending on R&D as a percentage of sales revenue has remained at levels seven times below the average for American ªrms. 43. data. Power and the Multinational Corporation. OECD Biotechnology Statistics 2009 (Paris: OECD. and National Science Board. Technology.: OECD. p. 2010). 184. On Chinese ªrms. 1953–1998. p. see Gilboy.145 The United States accounts for 20 to 25 percent of all patent applications for renewable energy. pp. moreover.141 When Chinese ªrms import technology. do not seem to be taking genuine steps to improve their technological abilities. 94–95.6 percent) and 76 percent of global revenues.. 1997). OECD Science. Europe. Brigitte van Beuzekom and Anthony Arundel. air pollution.
. 1991. Figure 8. 2008 SOURCE: OECD Main Science and Technology Indicators. Information-Communication Technology. 1991. and Renewable Energy Industries. Patent Applications. and Biotechnology Industries.China’s Century? 71 Figure 7. 2008 SOURCE: OECD Main Science and Technology Indicators. Nanotechnology. Patent Applications.
Va. ªrms seem to focus on activities in which proªts and proprietary knowledge are highest.S. the United States steadily increased its lead in knowledgeand technology-intensive services (see ªgures 9 and 10). suggest Chinese ªrms engage primarily in low-end activities. 6–7. 1995–2007 (current $. Data on Chinese hightechnology exports show that Chinese ªrms have increased their participation in high-technology industries. Over the same time period. 2010 (Arlington. such as 147.International Security 36:3 72 Figure 9.: National Science Foundation. trillions) SOURCE: National Science Board. U. the Organization for Economic Cooperation and Development has identiªed ten “knowledge. National Science Board. and proªts. Value Added of Knowledge-Intensive Services.S. a comparison of U. In sum.and technology-intensive manufacturing industries dipped during the 2001 recession but quickly recovered and has increased overall since 1996. Science and Engineering Indicators 2010.”147 The U. patents. Science and Engineering Indicators.S. in knowledge. lead. Finally. 2010). China has increased its investments in basic science. such as manufacturing and component supply.and technology-intensive industries” that are capable of “altering lifestyles and the way business is conducted across a wide range of sectors. in terms of value added. however. By contrast. and Chinese innovation systems over the past twenty years provides strong evidence against declinism and in favor of the alternative perspective that China continues to lag behind the United States. but these efforts have yet to signiªcantly enhance its innovative capabilities. pp. . Data on commercial R&D.
however. defense budget exceeds half a trillion dollars (eight times greater than China’s and rising) even when supplemental funding for the wars in Afghanistan and Iraq is excluded.: Brookings Institution. December 2010). leaders will reduce the defense budget in the coming years to help address the ªscal deªcits. 24 (Washington. 1996–2007 (current $. “Defense Budgets and American Power. product design. U. 2010 (Arlington. and branding. it has become more pronounced.: National Science Foundation. billions) SOURCE: National Science Board. The U.China’s Century? 73 Figure 10. and again from 2005 to 2009. but it is unlikely that such cuts will signiªcantly narrow the spending gap between the United States and China. development.” Policy Paper. .S. D. conventional military capabilities China’s military budget doubled from 1989 to 1994. and doubled again from 1994 to 1999.C. No. This division of labor has remained stable over the last two decades. Science and Engineering Indicators.S. if anything. Va. Michael O’Hanlon. Over the last ten years. it has declined relative to that of the United States (see ªgure 11). Value Added of High-Technology Manufacturing.148 One can argue that it is unfair to compare defense budgets because America’s military resources are dispersed across the globe while China’s are con148. 2010).
economic superiority literally gives the United States “more bang for the buck”—each dollar it spends on the military produces more force than each dollar China spends. Prospects. and the U. pp. Security: How Do We Assess the Military Balance? (Seattle. Vol. millions) SOURCE: Stockholm International Peace Research Institute Military Expenditure Database. of its military resources to contingencies involving the United States. however. does not devote all. I found that developing countries systematically fail at warfare. 2 (Fall 2009).International Security 36:3 74 Figure 11.: National Bureau of Asian Research.149 China. ªve of which fought wars against China within the last century. 11. Ross. and its government faces a constant threat of domestic rebellion. and perhaps not even a majority. 150. Wash. forthcoming). Nathan and Andrew Scobell.150 More important.S. the People’s Liberation Army (PLA) devotes substantial resources to internal security and requires 300. Dan Blumenthal. No. “Economic Development and Military Effectiveness. regardless of the size of their defense budgets. Competition and U. Military Spending. centrated in Asia. 34. and integrate individual technologies into cohesive military systems. In a separate study. 1988–2009 (current $.S. modernize. “China’s Naval Nationalism: Sources. Beckley. China shares sea or land borders with nineteen countries. and Andrew J. Response. chap. 151. Sino-U. China’s Search for Security (New York: Columbia University Press. 55–58. because they lack the economic capacity to maintain.S. its northern and western borders are porous and populated by disaffected minority groups.000 troops just to police China’s borders.151 149. the gap in defense spending likely understates the true military gap because U.S. December 2010).” International Security.” . As a result. Robert S.
“Military Modernization in the Asia-Paciªc: Assessing New Capabilities. as measured by per capita income. 2009).: Congressional Research Service. share of the world conventional arms market surged to 68 percent while China’s share dropped below 1. U.China’s Century? 75 Figure 12. p. an independent task force of more than thirty experts recently found “no evidence to support the notion that China will become a peer military competitor of the United States. “Conventional Arms Transfers to Developing Nations.C. but its performance in battle against the United States would not necessarily be much better than that of. 2001– 2008” (Washington. p. China’s defense industry has also fallen further behind: in 2008. As noted earlier. September 4. China can “pose problems 152. . Indeed. D. 54. D. Iraq circa 1991. Carla A. 73.” in Strategic Asia 2010– . August 16. and Richard F. and political factors. even after controlling for numerous material.C. chairs. . 2007). this growing economic gap is also a growing military gap.5 percent (see ªgure 12). The military balance today and for the foreseeable future strongly favors the United States and its allies. Grimmett. 71. say.-China Relations: An Afªrmative Agenda. the U. 1993– 2000” (Washington. “Conventional Arms Transfers to Developing Nations. social. Blair. If history is any guide. 1993–2008 (%) SOURCES: Richard F. The PLA may look increasingly respectable on paper. A Responsible Course (New York: Council on Foreign Relations.S. Hills and Dennis C. See also Richard Bitzinger.S.: Congressional Research Service. China’s per capita income has declined relative to that of the United States. Grimmett. Share of World Arms Transfer Agreements. 2001). .”152 None of this should be cause for chest-thumping. Multivariate regressions suggest that military effectiveness is determined by a country’s level of economic development. p.
2007). 2010). Entering the Dragon’s Lair: Chinese Anti-access Strategies and Their Implications for the United States (Santa Monica. China may surge out of its unimpressive condition and close the gap with the United States.” U.S. August 26. 25–35. 154. Krepinevich Jr. Naval Institute Proceedings. . however.S. Vol. No. Kenneth P. Andrew F. 44–51. and Chinese writings may purposefully exaggerate PLA capabilities.155 There is also reason to doubt the strategic importance of China’s capabilities because the United States may be able to launch effective attacks from positions beyond the reach of Chinese missiles and submarines. and Kevin L.S. but it is often incremental and nonlinear. No. Roger Cliff. pp. “On the Verge of a Game-Changer. especially in littorals and low altitudes close to enemy territory. Yang. and Travis Tanner (Seattle. 4 (July/August 2009). “Here Be Dragons: Is China a Military Threat?” National Interest. Chase. “On the Verge of a Game-Changer. Navy Capabilities—Background and Issues for Congress” (Washington. From 1961 to 1968.” U.S. local knowledge. Calif.” International Security.S. that the U. 4 (April 2010). Or China might continue to rise in place—steadily im- 2011: Asia’s Rising Power and America’s Continued Purpose. see Ronald O’Rourke. 4 (Spring 2001). On U. 157. Vol. No.153 In particular. Naval Institute Proceedings. 112. weak adversaries can impose signiªcant costs. 136. p. 4 (Spring 2004). 155. Thomas J. 136. Friedberg and Ross. 103 (September/October 2009). Vol.” U.. “Get Off the Fainting Couch. Ala. 2 (February 2010). 30. Vol. 25. Erickson and David D. Lyle Goldstein and William Murray. countermeasures. Archie.S. Ross.157 Sixty years ago. “Undersea Dragons: China’s Maturing Submarine Force. 28. Michael S. “Here Be Dragons. AAA. “No Game-Changer for China. Vol. 135. 161–196.” p. Vol. 24–30. No. but evidence of American vulnerability is not the same as evidence of American decline. D. pp. Ashley J. 88. “China’s Naval Modernization: Implications for U.: NBER.S. some experts believe China’s “antiaccess/area-denial” capabilities are outpacing U. Naval Institute Proceedings. and Andrew S. 42–48. pp. No. 1988). No. helicopters and aircraft with simple antiaircraft artillery and no early warning radar. On exaggerated Chinese capabilities. efforts to counter them. 153.” compensating for its technological and organizational inferiority by utilizing asymmetric strategies. pp. Tangredi. Mark Burles. pp.156 It is certainly true.S. 19–25. pp.S. 2010). Yes.” Foreign Affairs.: Congressional Research Service.” International Security. see Erickson and Yang. soldiers.” pp. 3 (May 2009). Sam J. Aaron L. “The Pentagon’s Wasting Assets. Conclusion Change is inevitable. Security Policy. 5–40. Wash. eds.C.: Air University Press. and a greater willingness to bear costs.S. Pollpeter. Derek Eaton.: RAND.700 U. In the coming decades. 18–33.International Security 36:3 76 without catching up. and SAM: A Short Operational History of Ground-Based Air Defense (Maxwell Air Force Base. China projected a huge army into Korea and killed tens of thousands of U.154 There are reasons to doubt this claim—the Pentagon is developing sophisticated countermeasures. “Posing Problems without Catching Up: China’s Rise and Challenges for U. Friedberg and Robert S. 26–32. Werrell. Tellis. North Vietnamese and Vietcong units brought down 1. Andrew Marble.. pp. Flak. This has always been the case. military has vulnerabilities. and Craig Hooper and Christopher Albon. Christensen. pp. however. Vol. 156.
and the trends suggest that the United States’ economic. and lure the brightest minds to the United States. exploit innovations created elsewhere. the United States remains mired in the worst economic crisis since the Great Depression and carries the largest debt in its history. John Ikenberry. Perhaps unjustiªed fears about the decline of the United States and the rise of China can similarly be used in good cause. both of which are potentially disastrous. N. 2002). Fear of the Soviet Union spurred the construction of the interstate highway system. this is what allows American corporations to specialize in high-value activities. and people around the globe. but it is not necessarily bad for Americans to believe it is true. Charles A. consumers.China’s Century? 77 proving its capabilities in absolute terms while stagnating.. they are likely to react in one of two ways. technological.”158 This belief may spur 158.: Cornell University Press. p. Moreover. The results of this study suggest that the United States beneªts immensely from the free ºow of goods. it blazes a trail for jingoistic and protectionist policies. Kupchan. Characterizing China’s export expansion as a loss for the United States is not just bad economics. scholars’ main message to policymakers has been to prepare for the rise of China and the end of unipolarity. The ªrst is that policymakers may imagine the United States faces a closing “window of opportunity” and should take action “while it still enjoys preponderance and not wait until the diffusion of power has already made international politics more competitive and unpredictable. Another danger is that declinism may impair foreign policy decisionmaking. If top government ofªcials come to believe that China is overtaking the United States. “Hollow Hegemony or Stable Multipolarity?” in G. let alone on large-scale problems. Fear can be harnessed in the service of virtuous policies. ed. or even declining. . America Unrivaled: The Future of the Balance of Power (Ithaca. but a deeply embedded condition that will persist well into this century. and military lead over China will be an enduring feature of international relations. It is impossible to say whether the current malaise is the beginning of the end of the unipolar era or simply an aberration. the recent partisan standoff over raising the debt ceiling suggests the American political system is losing the capacity for compromise on basic issues.S. 68. not a passing moment in time. At the time of this writing. This conclusion is probably wrong. The best that can be done is to make plans for the future on the basis of long-term trends.Y. all while reducing the price of goods for U. services. It would be tragically ironic if Americans reacted to false prophecies of decline by cutting themselves off from a potentially vital source of American power. In recent years. What could go wrong? One danger is that declinism could prompt trade conºicts and immigration restrictions. relative to the United States.
The overarching goal of American foreign policy should be to preserve this state of affairs. declinists may inadvertently promote the type of violent overreaction that they seek to prevent. “Declining Power and the Preventive Motive for War. Order and prosperity.” World Politics. If the United States abuses its power. The ªrst step toward sound strategy is to recognize that the status quo for the United States is pretty good: it does not face a hegemonic rival. and will be for some time.S. p. or hope. 74. 160. N. and Charles Doran and Wes Parsons. “From Preponderance to Offshore Balancing. Jack S. they are the result of determined action by powerful actors and. America’s global military presence might tempt policymakers to use force when they should choose diplomacy or inaction. “[H]egemonic struggles have most frequently been triggered by fears of ultimate decline and the perceived erosion of power. deªned in a narrow and national manner. Vol. War and Change in World Politics. but it also invites parochial thinking. Hegemony. however. 87. water scarcity. that whatever replaces American hegemony.S. that the world will sort itself out on its own. They can never be presumed. will naturally maintain international order and prosperity. “War and the Cycle of Relative Power. pp. and disease. carries its own risks and costs. which is. Advocates of retrenchment assume. by the most powerful actor. which may fester without a leader to rally collective action. but because its engagement lacks strategic vision. 1 (October 1987).International Security 36:3 78 positive action. 947– 965. 2000). whether it be a return to balance of power politics or a transition to a postpower paradise. Less obvious are transnational problems. Levy. No. and preventive war. 239. When achieved. not retrenchment. retrenchment. the United States. of course. 40. pp. . In particular. Declinists claim the United States should “adopt a neomercantilist international economic policy” and “disengage from current alliance commitments in East Asia and Europe. and the trends favor continued U. dominance. Arms buildups. insecure sea-lanes.”160 By fanning such fears.”161 But the fact that the United States rose relative to China while propping up the world economy and maintaining a hegemonic presence abroad casts doubt on the wisdom of such calls for radical policy change. reckless behavior. 4 (December 1980).159 As Robert Gilpin and others have shown. 159. are unnatural. No. in particular. such as global warming. Layne.Y. 161.” American Political Science Review. Origins of Major War (Ithaca. however. See also Dale Copeland. 118. Gilpin. Vol. 82–107. it is not because it is too engaged with the world.” pp. The other potential reaction is retrenchment—the divestment of all foreign policy obligations save those linked to vital interests.: Cornell University Press. and closed markets are only the most obvious risks of U. The solution is better strategy.