What should the U.S. do to try and keep up with China?

A vast majority of Americans have absolutely no clue how advanced China has become. Look at the social media comments, and it’s clear that too many Americans – especially Trump supporters – are filled with misinformation and prejudice. “China is 100 years behind” … “All Chinese products are crap” … “China can’t innovate” … “It’s a communist, poor, polluted country” … and, of course, the most popular theme is “China’s economy is about to collapse.” It’s hard to change these opinions, since those people reinforce their biases by gleefully consuming and sharing only anti-China articles. Anything remotely positive about China is attacked as “Chinese propaganda.”

This potent mix of ignorance and hubris is also precisely why western corporations gladly and voluntarily shared their intellectual property (IP) with their Chinese joint-venture partners. The term “forced technology transfer” was invented retroactively only after Chinese corporations started threatening western profits – for example: Huawei has overtaken Apple, Nokia and Ericsson in smartphones, 5G and telecom infrastructure; BYD manufactures more electric vehicles than Tesla; Alibaba and Tencent process 50x more mobile payments than the US; and the most valuable (ByteDance) and the most innovative (Meituan) startups are Chinese.

While it’s true that China as whole has a long way to go in GDP-per-capita, many big cities in China are essentially “developed economies.” Plus, China has surpassed the US in many areas and is catching up in others.

If you don’t know your competitor, you’re certain to lose the game. So here are some quick statistics on China’s global leadership:

Economy, manufacturing and trade

#1 in PPP GDP (been so since 2014 when it surpassed the U.S.)

#2 in nominal GDP ($13.5 trillion in 2018)

#1 in exports (been so since 2009 when it overtook Germany)



#2 importer ($2.1 trillion)

#1 in manufacturing value added (been so since 2010 when China took the crown from the U.S., which had been #1 for the previous 110 years). The chart below is based on data from the World Bank.

#1 in foreign exchange reserves (>$3 trillion)

#1 holder of U.S. debt (>$1 trillion)

#1 trade partner for 130 countries.

#1 in contribution to global GDP growth for the past decade (25-35%, which is twice that of the U.S.). That is, if the world GDP grows by $100, then $25-$35 comes from China.

#1 in steel, cement, aluminum production (link, link, link). In three years (2012 – 2015), China used more cement than the U.S. did in the entire 20 th century. (link)

century. (link) #1 in manufacturing of conventional cars (>26 million per year).



#2 in hi-tech manufacturing

#2 stock market, by market cap (overtook Japan in 2014)

Agriculture

#1 in production of rice, wheat, potato, beer(!), tea, apple, strawberry, grapes and numerous other grains, vegetables and fruits. (link)

Poverty and middle class

#1 in Middle Class population (350 million in 2018; and it overtook the US in 2015)

#1 in poverty elimination (800 million lifted out of extreme poverty)



#1 retail market in the world by 2019 ($5.6 trillion)

#1 in personal luxury goods sales (35% of global market)

#1 luxury car market (Example: 400,000 BMWs manufactured and sold in China in 2017)

#1 in international tourism spending (In 2010, Chinese tourists spent half as much as Americans; and by 2017, China was spending twice as much as the US)

Technology

#2 in Unicorns (startup companies worth more than $1 billion). 142 in China versus 175 in US)

#1 in solar, wind and hydroelectric power (link)

#1 in electric cars – manufacturing and sales (link)

Infrastructure

#1 in skyscrapers – more than half of all skyscrapers are in China (link)

#1 in high-speed railways or bullet trains (30,000 Km or 18,000 miles)

#1 in global infrastructure projects. China’s Belt and Road Initiative (BRI) involves 152 countries and international organizations. (link)

Science, research & development

#1 in science, technology, engineering and math (STEM) college graduates (4x as many as the US)

#1 in scientific publications (link)

#1 in 5G (China owns about 40% of 5G patents, and the world’s leading 5G vendor and patent holder is none other than Huawei)

#1 in Artificial Intelligence (AI) funding, startups and publications (link, link)

#2 in international patents – according to WIPO (#1 if patents filed in China are included)

#2 in R&D spending – according to U.S. National Science Board (#1 if measured by purchasing power)

#2 in number of satellites in orbit/space (280 satellites as of 2018). In 2018, China became the first country to land on the far side of the moon.

What should the U.S. do? Try to “contain” China? Start World War III to maintain our global hegemony? Become depressed and paranoid? Thankfully, the answer to all those questions is, “NO.” There are constructive things that America can and should do to prepare for the future. I will discuss those in my next article.