Presently, it is not a controversial statement to say that China will surpass the United States as the world’s most powerful and largest economy. However, many feel that this power shift will occur far in the future, and is therefore not an issue that needs to be addressed immediately. James Bullard, the Federal Reserve Board of St. Louis President, would disagree, though. He feels that China is likely to assume the title of the global economic leader much sooner than most people expect. With estimates of this transition ranging between as early as 2016 to 2028, Bullard expects China to pass the US on the short end of that spectrum. Therefore, he urges the population of America to begin accepting this change now, and to begin conceiving of how to act accordingly. All of our lives, and for the majority of our nations’ life, we have enjoyed our status as a world leader, if not THE world leader. But, we will have to get comfortable vacating that spot soon.
Bullard insists that we will have to adopt a relationship with China similar to the one that the UK shares with us. Even though currently China’s economy is roughly half the size of US’, Bullard points to China’s aggressive 7.5% growth rate target compared to our more conservative target which aspires to hit 3%. Ultimately, China is just too large for us to maintain a bigger economy than them. Similarly, Bullard expects India to one day surpass us as well, and for the same reason: sheer size. Bullard is quoted speaking of the implications of such changes:
“The U.S. is just used to being so much bigger than all of its typical rivals, both in terms of population and in terms of GDP, that it can heavily influence policy on many dimensions — not only economic policy, regulatory policy, even stretching into politics and certainly military aspects. This really dictates the world we live in,” & “A lot of people who’ve grown up with that, it’s been that way their whole life — they’re just not used to thinking about a world where you’re going to have to make more alliances, you’re not going to be the big kid on the block,” he said. “And the big kid on the block might not even be a democracy.”
He makes some interesting points. Undeniably, our world is changing and we must be prepared to accept it and adapt accordingly.