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US ahead of China in global stakes

by OMFIF Advisory Board

US ahead of China in global stakes

This month’s advisory board poll focused on America’s role as the world’s economic leader, considering its position in 2017 and whether China has the potential to overtake the US. Members of the OMFIF advisers network were asked, ‘As a Chinese president heads to Davos for the first time ever, will 2017 be the year when the US retreats from the international stage and China takes over as de facto world leader?’

This question was posed in the light of Chinese President Xi Jinping’s speech at the World Economic Forum in Davos. Many of Xi’s statements were openly responding to the protectionist rhetoric of President Donald Trump, placing himself as the defender of globalisation and free trade, stating ‘no one will emerge as a winner in a trade war’ and there is ‘no point’ in blaming economic globalisation for the world problems. Xi’s speech underlined China’s desire to play a greater global role while the US turns inwards.

Of those polled, 41 members (representing 91%) believe that the US will continue its hegemony, with only four members (9%) believing that China will take on the global leadership role as the US steps back. The consensus among members was that China remains unready for the role of global leader, as it is incapable of exerting an economic, political and cultural influence that would be universally accepted. Respondents emphasised that the US will take some economic damage from its switch to a domestic focus in 2017, but will remain unchallenged in its ability to influence global geopolitics.

AB poll

‘American ability to project power and influence globally will diminish in relative terms over the decades. The new US administration may signal a willingness to retreat or conduct policies which would accelerate US decline as the world leader. But these long-term shifts and short-term risks will not mean that China will become the instant, ready-made global leader in 2017.
‘US secular weakening and possible self-inflicted retreat are enabling trends for Chinese leadership, but the Chinese are aware that ‘restoring’ China to first-rank status takes time. The centenary of the People’s Republic in 2049 is Xi’s symbolic target. Trump’s policies may bring that target forward.’

Francois Heisbourg, Fondation pour la Recherche Strategique

‘The US will not be retreating. It will be pursuing a more unilateral policy and will be less concerned than in the past about whether it has support from others. It will still be the most important single country in the world. 
‘China’s role may well become more prominent as its economic weight and regional influence increase, but that does not mean that it will be exercising leadership on the world stage. In military, economic, political and cultural terms its influence worldwide will continue to be much less than that of the US.’

Christopher Tugendhat, House of Lords

‘China is totally incapable of world leadership, and is much more fragile than many Europeans imagine. China is now fully focused on the 19th national congress of the Communist Party later this year. Trump will no doubt enjoy ‘ego-tripping’ on the world stage, and sophisticated Europeans will know how to flatter Trump’s fragile ego. So the US will continue to lead, perhaps badly, but lead.’
John West, Asian Century Institute

‘An appearance at Davos is irrelevant to geopolitical power. Germany’s status is not diminished by Chancellor Angela Merkel’s non-appearance two years in a row. But the US is in enforced retreat in the Middle East as well as Asia. Russia, as well as China, is challenging US hegemony.’
Brian Reading, independent economist

‘The two countries will, hopefully in a friendly and constructive manner, compete with each other. The US would find it disadvantageous to withdraw from the international stage in such a dramatic way.’
Miroslav Singer, Generali CEE Holding

‘China will not become the world’s de facto leader in 2017. But the isolationist stance of Trump and the prominence of China in multiple fora in the world – not just Davos – will enhance China’s international position, despite the apparent move towards a more stringent political course within China itself.’
Roel Janssen, financial journalist

‘Trump’s strategy is not to retreat but to initiate pin-pricking policies to annoy China, and bring it to a bargaining table, helped by an alliance with Russian President Vladimir Putin.’
Meghnad Desai, House of Lords

‘America will not retreat, and if China’s advance is perceptible at all, it will be low key. Stages are built for actors: the US will furnish the most exuberant player, who will command a global audience.’
David Badham, World Platinum Investment Council

‘There will be no clear world leader in 2017. The US is likely to be weakened by the poor experience of its new leader and other members of the new administration, as well as other domestic factors. The European Union will be too incoherent internally. But the would-be leaders, China and Russia, have problems. China has a lack of useful allies with a shared vision. There are domestic economic issues in the financial sector and debts of state-owned enterprises.
‘This year is more likely to be something similar to a multipolar world, with each large power being more active (and leading) in its immediate neighbourhood. Wider issues may be dealt with in ad hoc partnerships.’
Vilem Semerak, Charles University

‘Trump may wish to focus on domestic issues, but international questions loom large. Arguments on tariffs, relations with Russia and Taiwan, and potential marked dollar strength, hardly suggest the US will disappear from the global stage.’
Colin Robertson, SW1 Consulting

‘The appearance of the Chinese president in Davos is not so important, but it is a signal. China will gain more attention compared to the US in 2017. The latter is with an unpredictable and erratic president. Trump, with his slogan Make America Great Again, will concentrate his efforts on domestic policies and not on geopolitics. 
‘But he will face opposition, when the shock of his election is over, from intellectuals, artists and academics, and from his voters when they feel betrayed. Trump cannot, will not and does not deliver what he promised during his election campaign. China is predictable and stable in its policies compared with what we will see in the US.’
Ernst Welteke, formerly Deutsche Bundesbank

‘China will not take over as world leader. But I believe that gradual and crucial changes are taking place within both Chinese and new American foreign policies regarding monetary and financial international positions.’
Maria Antonieta Del Tedesco Lins, University of São Paulo

‘Despite Trump, the US won’t retreat from the international stage and China will not take over as de facto world leader. The US won’t retreat. Despite Trump’s isolationist tendencies, politicians like Mike Pompeo, James Mattis, John Kelly and Rex Tillerson, and a number of strong voices in the Senate and House of Representatives, will keep the US engaged in the world.
‘China won’t take over because leadership in the world is not zero-sum. Building upon its economic strength, China is a rising military and geopolitical power. But the new world order is multipolar, not unipolar as it seemed for a time after the demise of the Soviet Union.’
David Cameron, Yale University

‘The Chinese will concentrate on their domestic economy and deeper regional ties while doing their best to calm US-China relations. At the same time, they will not accept any challenge to the One China Policy or their access to South China Sea islands via international waters. Tariffs will be another issue, as the Trump administration has the option in lieu of tariffs of ending border tax exemptions, particularly on US imports of foreign made parts.
‘Xi’s participation at Davos may be ill-conceived as a public relations move if it’s perceived as Mao’s successor casting his lot with the world’s elites.’
Marsha Vande Berg, Stanford University

‘American business interests are too deeply enmeshed in the global economy to permit such a retreat. The bigger danger is that China, sensing US ambivalence on international issues, becomes too assertive for its own good.’
Stewart Fleming, St Antony’s College, University of Oxford

‘US power and influence have been declining rapidly and will probably continue to do so for some years. But China is not, and may never be, capable of taking over as de facto world leader. One big reason is that it has no set of universal values – or least not ones that are acceptable to most other countries and peoples.’
Reginald Dale, Atlantic Council

‘While the post-second world war liberal order is fraying at the edges, the US is still “the indispensable nation”. China has not put forward a viable competing vison to liberalism and will be too preoccupied with domestic economic and social issues to challenge US leadership effectively in the next 15 years.’
George Hoguet, CFA Research Foundation

‘The US cannot afford to take a back seat, but will have to confront global challenges. Policies of the new administration may well show a departure from the pre-election rhetoric of Trump on a number of issues, including climate change. Under any scenario, one expects that Trump will have to live up to his promise to Make America Great Again.’
Hemraz Jankee, formerly Central Bank of Mauritius