The G20 economies: Managing China’s rise — and eventual fall
Formed in 1999, the Group of Twenty (G20) is a meeting designed to foster cooperation among the world’s most productive economies regarding complex issues of global financial and political stability. However, there is another way of looking at the G20. In this alternative view, it is a platform for the United States to offer other countries a way to buy into the grand American experiment of democratic capitalism and its “creative destruction” that continues to fuel global economic dynamism.
The two pie charts above represent each G20 member country’s share of total “G20 GDP” in 1992 and 2017 (excluding the EU, which is technically the 20th member of the G20 but is not represented in the graph). Notice that the US share remains roughly the same. Most of the change comes in China swallowing up the GDP shares of most of the rest of the democracies in the “G20 pie of prosperity.”
This initial observation tells two important stories. First, the United States was the most important player in the global economy in 1992 and maintains that central role a quarter of a century later. Declinism is a myth. Second, China is the story here, with important lessons regarding how Americans should think about modern authoritarian states — see Russia and Saudi Arabia.
On the first observation, there can and should be high-minded debate over the validity of using GDP as a measure of anything meaningful, but it is what it is: a flawed measure of the goods and services produced in a given country in a given year. There should also be a discussion regarding the use of purchasing-power-parity (PPP), which takes into account variations in the buying power of a US dollar across borders. However, trade and investment does not occur in PPP-adjusted dollars; it does so in unadjusted, nominal US dollars. There could also be a discussion about alternative measures of wealth. However, attempting to account for other forms of wealth would only vastly increase the American share of the G20 economic pie and further the point that declinism is a myth.
On the second observation, there is nothing inherently bad about Chinese economic growth. China’s growth has arguably been one of the greatest economic miracles of the past 40 years, but that is no reason to thrust the US upon the altar of Chinese revisionism and sacrifice the values of freedom and capitalism that got the G20 to this point. As noted by Bret Stephens in the New York Times, history has repeatedly demonstrated that “[t]hose whom the gods wish to destroy, they first tout as countries of the future.” When the Chinese dictatorship is using its newfound wealth to monopolize thought through massive reeducation camps, export corruption by solidifying single-party rule, and jeopardize world stability by threatening Taiwan and the South China Sea, there is an issue in need of attention — managing China’s decline. Authoritarian regimes rarely form the flexible institutions necessary for long-term success, and China’s day of reckoning will come. The US needs to be prepared for when “Xi Jinping Thought” becomes “Xi Jinping Panic.”