Does China threaten U.S. global economic dominance - Research Paper Example

Some reports even said that China, as one of the E7 – emerging economies are projected to go beyond the G7 countries around 2032iii. But a lot of things could happen before 2030. Take the example of Japan who almost unseat the U.S. in 1980s, but speculations on this did not materialize due to excessive trade surplus similar to what China is in right now. What stands on the way of China for becoming number one, and being the world’s economic power? Let us take a look at the important demographics.

Although China’s population today is 1,336,718,015, four times larger than the United States, its prime working age population of 20 to 35 years old continue to shrink because of its one child policy iv. Also, the vast majority of the population living in the rural areas is either very old or very young. Due to the large number of population, the huge cost of growth is expected to go up as demands for everything continues to go up. While it seems that China ranks close to U.S. in terms of GDP, it cannot be said that it is a dominant power.

It also shows that China is not necessarily richer, only bigger. In 2009, China has $9.872 trillion GDP while US has $14.72 trillion. In comparison, China has a GDP per capita of $7,400 and ranks 127th in the world, and it is dwarfed by the U.S. GDP per capita of $47,400, and is ranked as 10th in the world v. . nges that should preoccupy the government aside from staking a claim of economic global dominance, such as: (a) reducing its high domestic savings rate and correspondingly low domestic demand; (b) sustaining adequate job growth for tens of millions of migrants and new entrants to the work force; (c) reducing corruption and other economic crimes; and (d) containing environmental damage and social strife related to the economy's rapid transformation” vii.

It has been noted that development rests in the coastal provinces rather than in the interior; so much so that addressing the needs of 200 million rural laborers and dependents that have relocated to urban areas to find work is one of its problems Economic analysts view the China’s economic global dominance differently. Hugh Hendry,viii an economic adviser, argues that investors should not worry too much on the fallacy of China’s economic dominance. He said this will not happen because China, despite being the world’s largest creditor is also running a consistent trade surplus.

It is recalled that this is the same scenario that devastated US in 1920s and Japan in 1980s so that investors are warned of the occurrence of same incident to China. There is no doubt that China’s exports have remained strong amid the difficulties of the global economy. In 2010, China’s exports grew to $1.506 trillion, as compared to its 2009 exports of $1.204 trillion and have further widened the trade surplus with U.S. by 46% to $28.7 billion. ix However, demand for Chinese goods is projected to decline because of the slow growth of U.S. economy and debt problems in parts of Europe.

20% of China’s products are exported to U.S., and the rest goes to Hong Kong, Japan, South Korea and Germany. China has not completely erased the