It's almost here:
Under Purchasing Power Parities, the Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. Meanwhile the size of the U.S. economy will rise from $15.2 trillion to $18.8 trillion. That would take America’s share of the world output down to 17.7%, the lowest in modern times. China’s would reach 18%, and rising.
Just 10 years ago, the U.S. economy was three times the size of China’s… This is more than a statistical story. It is the end of the Age of America. As a bond strategist in Europe told me two weeks ago, “We are witnessing the end of America’s economic hegemony.”
Yes, all sorts of things could mess this timing up. But the direction is unmistakable and predictable.
China's rise is also abetted by the US still pretending it can run the entire planet with a bigger military than everybody else's put together. It cannot do this much longer without hollowing itself out from within. And slashing funds for infrastructure because we refuse to raise any taxes or seriously means-test Medicare and social security is not exactly the way to go about stabilizing this.
This dynamic is also a reason to worry about the debt sooner rather than later. The only reason America has gotten away with such rank profligacy is because of the dollar as the world's reserve currency. If China surpasses American GDP, that may soon become as much a historical fact as the pound sterling's global domination. What historians may see when they look at America's relative decline is a country that couldn't really acknowledge reality and went out in a blaze of unfunded spending and bloat, and ludicrously over-reaching experiments in war-as-social-engineering as its political leaders squabbled over pathetic ideological remnants from the 198os.
(Photo: People visit Chinese artist Huang Yongping's installation art work named 'Leviathanation' at Tang Contemporary Art of 798 Art District on March 29, 2011 in Beijing, China. The exhibition named 'Tracing The Milky Way' will be last until May 14. By Feng Li/Getty Images.)
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