A Partnership of Equals: How Washington Should Respond to China’s Economic Challenge
by C. Fred Bergsten, Peterson Institute for International Economics
Article in Foreign Affairs
July 2008
This article is adapted from the forthcoming book China's Rise: Challenges and Opportunities.
To be an economic superpower, a country must be sufficiently large, dynamic, and globally integrated to have a major impact on the world economy. Three political entities currently qualify: the United States, the European Union, and China. Inducing China to become a responsible pillar of the global economic system (as the other two are) will be one of the great challenges of coming decades—particularly since at the moment China seems uninterested in playing such a role.
China has a profound interest in seeing that the international rules and institutions function effectively.
The United States remains the world's largest national economy, the issuer of its key currency, and in most years the leading source and recipient of foreign investment. The European Union now has an even larger economy and even greater trade flows with the outside world, and the euro increasingly competes with the dollar as a global currency. China, the newest member of the club, is smaller than the other two but is growing more quickly and is more deeply integrated into the global economy. Its dramatic expansion is therefore having a powerful effect on the rest of the world. (China is often paired with India in such discussions, but India's GDP is less than half of China's. The value of the annual growth of China's trade exceeds the total annual value of India's trade. China will dominate its Asian neighbor for the foreseeable future.)
China poses a unique challenge because ...