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China is wrong to think that the United States is facing an inevitable decline

The Chinese elite are convinced that the United States is in an irreversible decline.So report Jude Blanchett A respected Washington-based think tank from the Center for Strategic and International Studies. What is happening in the United States in recent years, especially in politics, supports this view. Stable liberal democracy does not elect Donald Trump (a man who lacks all the necessary qualities and abilities) as a national leader. Nevertheless, the concept of US decline is exaggerated. The United States holds large assets, especially in economics.

For a century and a half, the United States was the most innovative economy in the world. That is the basis of its global power and influence. So what does that innovative power look like today? The answer is pretty good, despite the competition with China.

The stock market is incomplete. But the value investors give to businesses is at least a relatively fair assessment of their outlook. At the end of last week, 7 of the 10 most valuable companies in the world and 14 of the top 20 were headquartered in the United States.

Without Saudi Arabia’s oil, the five most valuable companies in the world would be US tech giants Apple, Microsoft, Amazon, Alphabet and Facebook. There are two valuable technology companies in China, Tencent (7th) and Alibaba (9th). But these are the only Chinese companies in the top 20. The most valuable European company is LVMH in 17th place. Still, LVMH is just a collection of established luxury brands. It should worry Europeans.

Looking at technology companies alone, the United States makes up 12 of the top 20 companies. There are three in China (including Hong Kong but excluding Taiwan). There are two Dutch companies. One of them, ASMLIs the largest manufacturer of machines that manufacture integrated circuits. Taiwan has Taiwan Semiconductor Manufacturing Company, the world’s largest contract computer chip maker, and South Korea has Samsung Electronics.

Lollipop chart showing the market value of the 20 most valuable technology companies in the world as of April 23, 2021

Life sciences are another important area for future prosperity. Here, there are 7 European companies (including Switzerland and the UK) in the top 20. However, the United States has 7 companies in the top 10 and 11 companies in the top 20. There is one Australian and one Japanese company, but no Chinese company. ..

In short, US companies are globally dominant, and almost all of the most valuable non-US companies are headquartered in the Allies.

This stock market-based approach clearly excludes state-owned Chinese companies and uncited Chinese companies. Huawei, A world leader in telecommunications equipment. China claims to be leading in other areas, especially high-speed rail. But the origin of the technology was elsewhere. Rather, China’s success in railroads and several other areas lies in building infrastructure quickly and on a large scale.

Lollipop chart showing the market value of the 20 most valuable life sciences / pharmaceutical companies in the world as of April 23, 2021

Some may argue that the dominant US company is no longer young. In addition, US tech giants have acquired many companies founded elsewhere. Still, it’s certainly one of their strengths.

In addition, the United States continues to lead venture capital.by Deal roomVenture capital investment totaled $ 487 billion in the United States from 2018 to the first quarter of 2021 against $ 379 billion from all of China, the United Kingdom, India, Germany, France, Canada, Israel and Singapore. was. In terms of ratio to GDP, US investment lags behind Israel and Singapore. In international patent applications, China was the first in 2019, 59,045 against 57,705 in the United States... However, the remaining top 10 countries were US allies. Combined with the United States, their patent applications were nearly 175,000.

A bar chart showing that the United States has the largest venture capital sector by showing total venture capital investment from 2018 to the first quarter of 2021

University is also important. In one of the famous rankings, 5 of the top 10 universities and 10 of the top 20 are American and only one Chinese.Moreover, as Richard McGregor argues in his excellent book. Xi Jinping: repulsion, China’s centralized control is becoming more and more stringent. Such management does not promote sustainable creativity.

Overall, the situation in the United States is not one of the collapses into economic meaninglessness, especially when combined with its allies. Even if China soon has the world’s largest economy by all means, it is still not the most productive or innovative. Moreover, the United States and its allies should stay ahead for a long time, even if Western rule does not actually undermine China’s economy.

Bar chart showing that the US venture capital sector is even larger than GDP by showing venture capital investment as a percentage of GDP from 2018 to the first quarter of 2021

The biggest threat to the role of the United States in the world lies not in China, but in itself. Election of leaders who despise democracy, ethnic diversity, global alliances, science and reason will surely decline. Republicans did not deny the former president It’s more likely to happen. Still, it would be the result of self-harm in failing to create a better shared vision for the future.

That way, the Chinese elite would be right that the United States is on the road to ruin. But it may still be wrong for them to think their direction is better. Putting 1.4 billion intelligent people under the control of a party and being ruled by one person is not the best way to go.

Bar chart showing that many of the world's leading universities are American by showing the QS World University Rankings-Top 20 Overall Scores

A great asset in the United States is its ability to attract the best and brightest people in the world. The two men, born in India, currently run Microsoft and Alphabet. One of Google’s two co-founders was an immigrant from the Soviet Union. The immigration exclusion currently on display is contrary to this. However, diversity within a shared institutional and values ​​framework can be a source of great vitality for US strength in business, culture and politics.

It is unlikely that the United States will continue to be the dominant force in the world just because China’s population is more than four times larger. Still, if the United States remains democratic, free and open, it is quite possible that it will remain the most influential country in the world. If instead the reactionary decides what he wants, it fails. But that would be its own choice, not fate.

martin.wolf@ft.com

China is wrong to think that the United States is facing an inevitable decline

Source link China is wrong to think that the United States is facing an inevitable decline

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