ALERT – new take on China’s “economic supremacy”
An article by Joseph S. Nye,Jr. in the latest Washington Quarterly provides an excellent antidote to the endless “hype” about China. Nye is a famous academic and commentator, University Distinguished Service Professor at Harvard University, and the man who invented the term “soft power”. Here he challenges the myth that China is the inew economic superpower and that America is now past it.
Briefly Nye points out that the World Economic Forum still rates the US economy as the world’s second most competitive, while China is ranked number 29. The US is still a major leader in biotechnology, nanotechnology and the World Wide Web. In addition he sees China as having very little soft power, generally, and much less than the US even after its recent travails. Other analysts have made this point recently. A BBC poll of 28 countries in 2010 showed a positive Chinese image only in Africa and some parts of Asia (principally Pakistan), while in most of the Americas, Asia and Europe it was neutral to poor.
China holds huge reserves of foreign exchange in US dollars. Many ascribe China’s power relative to the US to this. Nye puts this in context: “Some observers have described this as a great shift in the global balance of power because China could bring the US to its knees by threatening to sell its dollars. But in doing so, China would not only reduce the value of its reserves as the price of the dollar fell, but would also jeopardise US willingness to continue to import cheap Chinese goods, which would mean job losses and instability in China. If it dumped its dollars , China would bring the US to its knees, but might also bring itself to its ankles.”