China is wrong to think that the US has an inevitable decline

The Chinese elite is confident that the US is irreversible. So reports Jude Blanchette Center for Strategic and International Studies, a respected Washington-based think-tank. What has been happening in the US in recent years, especially in politics, supports this view. A stable liberal democracy would not choose Donald Trump – a man who does not have all the necessary characteristics and abilities – for national leadership. However, the idea of ​​a decline in the US is exaggerated. The US holds large assets, especially in the economy.

For a century and a half, the US has been the most innovative economy in the world. That has been the basis of his power and global influence. So what is the innovative power it has today? The answer is: pretty good, despite China’s competition.

The stock markets are imperfect. But the value that investors place on companies, at least, is a fairly unbiased assessment of their forecasts. At the end of last week, 7 of the top 10 most valuable companies in the world and 14 of the top 20 were headquartered in the US.

If it weren’t for Saudi Arabia’s oil, the five most valuable companies in the world would be US tech giants: Apple, Microsoft, Amazon, Alphabet and Facebook. China has two valuable technology companies: Tencent (seventh) and Alibaba (ninth). But these are the only companies in China’s top 20 positions. The most valuable company in Europe is LVMH in 17th place. However, LVMH is just a collection of established luxury brands. That should worry Europeans.

When we look only at tech companies, the U.S. has 12 of the top 20; China (with Hong Kong but excluding Taiwan) has three; and there are two Dutch companies, one of them, ASML, is the largest manufacturer of machines that make integrated circuits. Taiwan has Taiwan Semiconductor Manufacturing Company, the world’s largest contract computer manufacturer, and South Korea has Samsung Electronics.

Life sciences are another crucial sector for future prosperity. Here are seven European companies (including Switzerland and the UK) in the top 20. But the US has seven of the top 10 and 11 of the top 20 are also an Australian and a Japanese company, but they have no Chinese business. .

In short, U.S. companies dominate the world and almost the most valuable non-US companies are headquartered in allied countries.

This stock market-based approach obviously excludes state-owned Chinese businesses, as well as non-listed ones. Huawei, a world leader in telecommunications equipment. China claims leadership in other areas, especially high-speed rail. But the origin of this technology was elsewhere. Rather, China’s success in railways and many other areas has been the construction of infrastructure at speed and scale.

One could say that major US companies are no longer young. In addition, U.S. tech giants have bought many companies created elsewhere. However, surely that is one of their strengths.

In addition, the US remains a leader in venture capital. According to Dealroom, venture capital investment was $ 487 billion from 2018 to the first quarter of 2021 in the U.S., compared to $ 379 billion in China, the United Kingdom, India, Germany, France, Canada, Israel and Singapore. Even as a relative to GDP, U.S. investment was only lagging behind Israel and Singapore. In international patent filings, China was first in 2019, with the US at 59,045 and 57,705 respectively. But the remaining 10 major countries were US allies. Along with the U.S., there were nearly 175,000 patents filed.

Universities are also important. In a popular ranking, 10 of the top 10 universities and 10 of the top 20 universities are American and the only one is Chinese. Also, as Richard McGregor says in his excellent book Xi Jinping: ReactionCentralized control in China is becoming increasingly tight. This control never promotes lasting originality.

Overall, the U.S. image has no economic significance to fall into, especially when combined with its allies. Even though China will soon be the largest economy in the world by all means, it will still not be the most productive or innovative. Moreover, the US and its allies should continue ahead for a long time, even if Xi’s rule does not make up China’s economy.

The biggest threat to the role of the US in the world lies in itself, not China. If he chooses leaders who despise democracy, ethnic diversity, global alliances, science and reason, he will surely decline. Republicans have not ruled out the former president that is likely. However, that would be the result of not creating a shared vision of a better future.

The Chinese elites would be right then that they are on the verge of ruining the US. But they may still be wrong in thinking that the direction is better. It can’t be the best way to put 1.4 billion people in control of an intelligent human party, controlled by a man.

The great asset of the US has been its ability to attract the best and brightest in the world. The two Indian-born men now run Microsoft and Alphabet. One of Google’s two founders was an immigrant from the Soviet Union. The nativism now shown goes against this. But diversity, within the framework of shared institutions and values, could still be a tremendous source of vitality in the strength of the U.S. in business, culture, and politics.

The US is unlikely to remain the world’s leading power because China’s population is four times larger. However, if the US remains democratic, free and open, it has great potential to keep the world’s most influential countries looking to the future. If his reactionaries decide to do what they want, he will fail. But that would be his choice, not his fate.

martin.wolf@ft.com