Opinion | What Can Replace China as a Global Economic Engine? | CPT PPP Coverage

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This is not a trivial matter. To an extent that few Americans genuinely appreciate, global growth has been powered by the so-called Chinese miracle for almost half a century now. According to World Bank data, between 2008 and 2021 — as the world’s per capita G.D.P. grew by 30 percent and China’s by 263 percent — China accounted for more than 40 percent of all global growth. If you excluded China from the data, global G.D.P. over that period would have grown not by 51 percent but by 33 percent, and per capita growth would shrink to 12 percent from 30 percent. In other words, recovery from the Great Recession was so robust in China that alone it nearly tripled per capita growth worldwide in those years. And that wasn’t even the most impressive period. In 1992, China’s G.D.P. grew by 14.2 percent; in 2007, it reached the same peak; in the 15 years since, it has averaged barely half that.

Chinese statistics are notoriously unreliable, and averages can obscure and flatten quite a bit, but the effect of China’s rise is even more remarkable at the lower end of the income spectrum, where 800 million Chinese were lifted out of global poverty in recent decades. In fact, as David Oks and Henry Williams noted in a perceptive 2022 essay tracing a distressing slowdown in global development, the gains of the last four decades weren’t really global at all, but Chinese. By their calculations, China was responsible for roughly 45 percent of the total reduction in the global measure of “extreme poverty” since 1981, with an even greater impact in the less extreme cohorts: Nearly 60 percent of people worldwide who rose above the $5 a day mark and 70 percent who rose above the $10 a day mark were Chinese.

Of course, you can’t just cut China out of economic history and treat what remains as a natural counterfactual; this is what globalization means, that the economic arc of one country is inextricably tied up with the economic fate of many others. But globalization also means you can’t reduce China’s contribution to the global economy over those years to the matter of its own G.D.P. — because through its boom China reshaped the world’s markets, becoming a natural commercial and financial hub, infrastructure leader, universal trade partner and demand sponge, soaking up much of what Asia and the world as a whole had to offer up or make. And while some thriving countries have succeeded by replicating China’s pattern of development powered by manufacturing and urbanization, others have been growing as natural resource exporters serving the Chinese boom and surfing what is called the global commodity supercycle that it produced. In feeding that sponge, some nations have deindustrialized prematurely along the way, leaving them less well equipped to navigate the new landscape on their own. According to Ricardo Hausmann of the Harvard Kennedy School, since 1970, only 20 percent of countries have narrowed their income gap with the United States; the other 80 percent have not.

And while some forecasters have been eager to anoint India as the world’s next China, there are many problems with that simple analogy. As Tim Sahay recently detailed in Foreign Policy, India’s manufacturing sector has in fact shrunk in recent years, with agricultural labor actually growing, and private investment is a smaller share of G.D.P. than it was a decade ago; under Prime Minister Narendra Modi, the country is utterly failing to deliver basic “health before wealth” building blocks necessary for the country to move up the world’s economic ladder more rapidly.

So where does that leave the future? Quite likely not somewhere great, even if the world’s great powers manage to avoid direct conflict.