With the collapse of communism in 1989, the bipolar world order ended and the United States became the undisputed leader of the world. The failure of communism and the rapid growth in the US economy in the 1990s have led to a great deal of enthusiasm in Western countries. The free market economy is said to be a magic recipe for every problem. This enthusiasm had reached such a point that Francis Fukuyama declared the end of history in his book "The End of History and The Last Man" published in 1992. According to the prevailing view of the time, liberal values and the market order, which should not subject to any control, would spontaneously solve all problems in the world. As Russia and the former Soviet countries moved to the free market economy, Chinese communist regime, which implemented an original mix of free market economy and communism has continued.
The period of exuberant growth during the 90s ended with the explosion of the dot.com balloon in 2000. Technology stock prices fell to one fourth in two years compared to the peak it saw in 2000. Over the years, things have improved and a new period of rise has begun in the stock markets. The world economy was shaken again by the mortgage crisis in the USA in 2008 due to uncontrolled lending mechanisms and authentic financial assets. Especially in Europe, the crisis that has led to a long recession that seems to have been overcome for the past few years.
Chinese economy has been steadily growing since 1978.
Source: Worldbank Data, Visualization by Google
This stable growth has made China the only economic power that can be compared to the US in the world.
Source: Worldbank Data, Visualization by Google
The above data does not include year-end 2017. The chart below, including the 2017 year-end data, shows what will happen if China continues its successful growth story.
Source: bloomberg.com
If Chinese economy continues to grow by 6.5% and the United States by 2%, China could surpass the United States in terms of GDP in the second half of the 2020s.
Although China has achieved an economy of up to 62% of the US in terms of total economic size, the US is at a standstill in per capita income. The development of per capita income statistics, based on purchasing power parity, is shown below.
Source: Worldbank Data, Visualization by Google
In the discussions on whether developing countries can reach the same level to developed countries, there is a threshold called the medium income trap. In countries whose economy is based on exports, it becomes difficult to maintain economic growth as wages rise after a while. Countries such as South Africa and Brazil have not surpassed this threshold for years after reaching a certain economic size. Such a situation is also valid for Turkey. When evaluated on dollar basis, the Turkish economy has been counting on the same national income per capita for nearly 10 years. I wonder if after a while China will fall into the middle income trap? In order to judge, we need to examine the situation of China in terms of innovation and advanced technology.
Technologies such as internet and blokchain that enable me to deliver this article to you are of U.S. origin. Steemit is also a U.S. company. Does it make sense to discuss whether China will be able to pass the United States in a while?
My interest in China has increased with my researchs of the topics of advanced technology. I have obtained the following map of Google trends for search statistics of the word artificial intelligence. Dark blue indicates intense volume of searches.
Source: https://trends.google.com.tr
The map below shows the world-wide search volume for the word blockchain
Source: https://trends.google.com.tr
Among the indicators we can measure the performance of a country in terms of advanced technology and innovation are the number of patents received, the number of published academic articles.
In 2017, for the first time in history China entered the world's top five in terms of the number of patents.
Source: Bloomberg.com
China has passed the United States in the number of academic papers published in 2016. Contrary to 426,000 articles published in China in 2016, 409,000 articles were published in the United States.
PISA results are one of the most important statistics to predict the future performance of a country. China is performing quite well in statistics that compare the performance of 15-year-old students in mathematics, reading and science. According to the results announced in December 2016, Chinese students' scores in mathematics were 531 and American students' scores were 470. In the field of science, Chinese students' scores were 518, while American students' scores were 496. When Singapore and Hong Kong are included in the picture, the picture becomes much more dramatic in favour of China. You can see the details here
Can China become the leading country in the world with its successful economic performance? To understand this, we need to look at social indicators as well as economic indicators. The Social Development Index, which measures the capacity of a country to meet the basic needs of its citizens and to provide them an environment in which they can maintain and improve their quality of life, can be a good indicator of this.
Source: https://www.socialprogressindex.com/results
China seems to have a lot to do on this issue. In comparison to other developed countries, though, the United States is not at a good point with regard to these social indicators.
Will China be the leading country in the world by overtaking the United States? The gross national income of the United States passed England in 1899. Nearly 50 years after the United States became the leading country in the world. It happened after World War II. Even if China passes the United States in terms of GDP in the second half of the 2020, it seems that the leadership of the United States will continue for a long time.
The emergence of an alternative super power to the United States is good news for the rest of the world. A world order in which leading countries and opposing ideologies compete to convince the peoples of the world is better for us.
Thanks for reading.
Image Source: https://pixabay.com