In Trump’s Competition with China, China is Winning

Donald Trump doesn’t have much interest in numbers and the real world, but that is where the rest of us live so it is worth checking in periodically. Trump and many others — including many Democrats —  are anxious to see the United States as engaged in a Cold War-type competition with China.

I have argued that this is a foolish way to shape foreign policy. The first Cold War was not a lot of fun. We threw a lot of money in the toilet building weapons, most of which were thankfully never used. But we did have hot wars in Korea and Vietnam, as well as a large number of interventions in various countries around the world. And we did have a number of flashpoints, most notably the Cuban missile crisis, where a wrong step could have annihilated the world.

Anyhow, to my view we should not see the Cold War with the Soviet Union as a model to be emulated. But apart from my personal views, there is a fundamental difference between the Soviet Union and China. At its peak, the Soviet economy was roughly half the size of the U.S. economy. China’s economy is already one-third larger than the U.S. economy and growing far more rapidly. This was true before Donald Trump took office, but the growth gap has been even larger in the first six months of this year.

China’s economy has been growing at more than a 5.0 percent annual rate. Meanwhile the US economy grew at just a 1.2 percent annual rate. Put in dollar terms, China’s economy has grown by roughly $1 trillion in the last six months, while the US economy has grown by just $180 billion.

This comparison doesn’t really mean much to any of us in our daily lives. People care about whether they have jobs, rising wages, and living standards. Things don’t look great on the wages and living standards front either, but I’ll leave that one for now.

The point here is that if we envision ourselves in a Cold War competition with China, we’re losing badly. I know that China’s growth statistics must always be viewed with skepticism (that may be true here soon as well), but there is little doubt that over long period of times they are pretty much on the mark.

Over the last half century China has gone from Sub-Saharan Africa living standards to upper middle-income living standards. This means that even if the 5.0 percent growth reported for the first half of the year may not be exactly right, it is likely in the ballpark.

So, we shouldn’t be like Donald Trump and say we can ignore the numbers. We are behind China and falling further behind. Those are the facts that the New Cold Warriors need to recognize.

This first appeared on Dean Baker’s Beat the Press blog.

The post In Trump’s Competition with China, China is Winning appeared first on CounterPunch.org.