China's recovery is impressive, but economy still isn't back to normal: China Beige Book CEO
Political divisions and economic weakness affecting the United States has led to continual dysfunction, putting its status as the world’s economic leader in doubt, according to a number of experts.
The country, already changed by President Donald Trump’s isolationist policies, has increasingly been turning inward after a bitter election fight and its struggle to gain control over the COVID-19 pandemic.
Meanwhile, China appears poised to overtake the U.S. as an economic power. Earlier this month, Chinese President Xi Jinping was quoted by state media as saying the country’s economy could double in size by 2035, implying an annual average growth rate of 4.7 per cent. Bloomberg estimates using International Monetary Fund data show China’s proportion of worldwide growth is on track to be 17 percentage points higher than that of the U.S. by 2025.
“The biggest winner of a bifurcated U.S. has been China,” Gord Nixon, former CEO of Royal Bank of Canada and chair of BNN Bloomberg parent company BCE Inc., said in a recent interview. “The dysfunctionality of the U.S. and [its] withdrawal from international organizations has contributed to the rise of China and the reduction of the U.S. position as a global leader.”
Nixon said the U.S. will continue to become more insulated and protectionist, a trend started by Trump under his “America First” trade policies. Trump, who has stoked tensions with China since taking office, started a trade war that for now has resulted in a phase one trade agreement between both countries.
David Rosenberg, chief economist and strategist at Rosenberg Research, said that while the rest of the world battles the resurgence of COVID-19 cases, China in the meantime will maintain its fast growth and strong productivity trends.
“The irony of ironies is that China – the epicenter of the coronavirus – is the only country in the world that’s going to have positive growth next year and probably accelerate to over eight per cent next year,” he told BNN Bloomberg in an interview. “Within the next 10 years, I reckon China’s economy will be bigger than America’s. That’s going to have all sorts of geopolitical consequences and the question will be, what can be done to curb that ascension? I don’t think it can be reversed.”
Margaret McCuaig-Johnston, senior fellow at the University of Alberta's China Institute, said that the fact the U.S. is still reeling from the pandemic could facilitate a shift in global leadership towards China.
“If the U.S. continues on its current trajectory of COVID deaths and the costs to the economy from COVID with major companies failing, I think that’s very much a possibility,” she said in a phone interview.
“Certainly China has its act together. Its strategies and plans are extremely comprehensive: They’ve got science, technology and innovation plans that are better than what the U.S. has.”
McCuaig-Johnston added the more multilateral approach that U.S. president-elect Joe Biden will likely take would help rein in China’s more aggressive foreign policy ambitions and be more effective at addressing human right abuses.
"The U.S. together with other countries is a more effective front than the U.S. running and doing whatever it wants, while other countries try to figure out collectively what they can do,” she said.
Former trade advisor to the White House Harry Broadman agrees. He told BNN Bloomberg in an interview that Biden could tap into the fact that other countries such as Canada are having their own problems with China, and create a multilateral front.
“That is [China’s] biggest fear, frankly: that a group of countries gang up on them,” Broadman said.