Has the Chinese Dragon a chance to stand up to the American Eagle?

The US national security doctrine views China as a major adversary capable of challenging their global leadership. The failure of Russia's invasion of Ukraine has brought this issue into sharp focus. In realpolitik the processes begin to demonstrate that some countries have begun to view China as an alternative power centre.

On 24 February 2023, the Chinese Foreign Ministry released a 12-point plan to resolve the Russia-Ukraine war titled "China's Position over Political Solution to the Ukrainian Crisis". On 20-22 March 2023, Xi Jinping, Secretary General of the China Communist Party and Chairman of the People’s Republic of China, visited Russia. Many experts believe that if it were not for China's position, Russia would not be able to continue its military campaign against Ukraine. It is no mere coincidence that on 6 April 2023, Beijing hosted a reconciliation meeting between one of the former close partners of the US and its main rival in the Middle East, Saudi Arabia and Iran. Even more, French President Macron visited China in order to secure Beijing's support to reduce Europe's dependence on the US.

 This article aims to clarify whether expectations that the PRC can compete with the US on an equal footing in the near term are justified.

It is worth recalling that China's political aspirations are driven mainly, but not exclusively, by its economy. Let us try to find out to what extent it meets the global aspirations of Beijing.

According to published data, in 2022 China's GDP reached $18 trillion, which is significantly (27%) lower than the $22.94 trillion GDP of the United States. However, some economists argue that the PRC economy is the largest in the world since 2014, if GDP is calculated by purchasing power parity (the ability of a monetary unit to exchange a given amount of goods and services).

According to their estimates, the yuan is highly undervalued and is bound to strengthen against the dollar, which testifies to the dominance of the Chinese economy. Over the years, however, instead of appreciating, the yuan has been depreciated. Note that even the switch to national currencies by Russia and Iran in their mutual settlements with Beijing failed to strengthen the yuan. To make the numbers game more understandable, here is an example. As viewed by some Azerbaijani economists, our manat is also undervalued, and really costs 45 qapiks in respect to the dollar. If we calculate our GDP at such a rate, it will be worth 4.7 times more than when we determined it at face value. However, calculations of this sort can only raise a smile.

A clearer picture of a country's economic growth and development is given by GDP per capita. Here the US has a bigger advantage: its GDP is nearly five times that of China ($61,856 versus $12,551). As is known, one of the key indices of production efficiency is labor productivity. In 2019, the US produced $117,200 worth of output per person employed which is up by 3.7 times from China. According to this index, the country is inferior even to the Russian federation (by 73%).

For the purposes of our analysis, qualitative rather than quantitative economic indices are more appropriate. A formal comparison of countries in terms of total GDP and GDP per capita, while important, tells us nothing about the real economic potential of a country and its level of economic development. Gross figures cannot always transform into global strength. For instance, many commodity countries have very good quantitative indices, but they fail to become a global powerhouse because their economies lag behind in terms of qualitative indices. It is therefore worth examining the GDP structure of these countries.

For instance, 78% of the American GDP is generated in the service sector, which includes education, health care, science, finance, trade, transport and communications, governmental services, and various professional and personal services, while 47% of the Chinese GDP is generated in construction and industry.

It ought to be noted that the most important structural characteristic of today's advanced economy is its high share of numerous types and branches of services which form a systemic economic sector and testify to the transition to a post-industrial type of economy. When comparing GDPs, it becomes evident that China lags far behind on the most important development indices, having a more backward economic structure with a predominance of traditional industries and a smaller share of the knowledge-intensive sector and the service sector.

True, China is 25% ahead of the United States in total manufacturing output ($6 trillion versus $4.8 trillion). However, it is behind the United States in the high-tech segment (where research and development expenditure accounts for 10 to 30% of its value added): aerospace, pharmaceuticals, computers, computers and office equipment, semiconductors, radio and television equipment, communications equipment and measuring, medical, navigation, optical and testing instruments.

According to 2016 data, the US aerospace industry has an 8-fold and the medical, navigation, optical and testing instrumentation industry a 3-fold advantage over the appropriate industries in China, although parity is maintained in the other sectors of the complex. Worthy of note is the fact that a significant portion of China's high-tech manufacturing is controlled by multinational corporations. Nearly all the famous US brands Apple, Dell, HP and others are present in the Chinese market.

On the other hand, China has a 69.5% advantage in the medium high-tech sectors (automobile and chemical industry, electrical machinery and apparatus, railway and other transport equipment and machinery) where the level of R&D expenditure is between 5-10% of the value added.

The comparison is indicative of the fact that China's success is mainly due to the development of low- and medium-generation industries, the use of innovation and technology. 

Besides, US companies retain global leadership by a wide margin over Chinese firms in ICT and communications, nanomaterials, bio-pharmacology and robotics and other advanced technologies. Suffice it to say that the turnover of Apple alone is slightly less than the combined turnover of the top 5 Chinese technology firms: $260 billion versus $291.9 billion. This is legitimate, as the US spends much more on research.

In 2021, Americans spent 3.4% of GDP or $792 billion on research and development (R&D), while the Chinese spent 2.4% of GDP or $441.13 billion, 79.5% or $351 billion less. An important index reflecting a country's position in science and innovation is the so-called Global Innovation Index, developed by the World Intellectual Property Organization. In 2019, the US was ranked third and China was ranked fourteenth in terms of innovation activity.

An emphasis on the high-tech sector is explained as being due to the fact that it is the industry that gives it the edge in the battle for global leadership. As distinguished from medium-high-tech products, they have no alternative in the global market.  As of the end of 2022, the United States already dealt a blow to its rival by imposing a ban on exports to the Celestial Empire of semiconductor technology and equipment for its manufacture. The New York Times wrote at the time that these restrictions were "the toughest US export controls in a decade". Chinese processor manufacturers have already suffered significant losses because of them. As the competition grows, Washington could prohibit US companies from investing in China's high-tech industry. If the sanctions are considered to be the beginning of a cold confrontation between these countries, China will not be able to take adequate measures in such a turn of events. Incidentally, it all started with sanctions, too.

As distinct from the US economy, the Chinese economy is more export-oriented. Thus, in 2021, China's export in respect to GDP was 20 percent or $3.36 trillion as compared to 7.6 percent or $1.75 trillion in the United States. At first glance, this situation seems attractive for China. However, in terms of global competition, it can very easily turn into a weakness. Sixty-two percent of Chinese exports go to the U.S., EU, South Korea, Britain, Japan Australia, India and Vietnam. Recall that India and Vietnam have serious tensions with China, while the rest of the countries on the list are allies of the United States. This gives Washington a strong trump card. If the situation worsens, the U.S. can convince these countries to reject Chinese goods, as it was done with Russian energy resources, and the Chinese economy will not withstand such a blow.  And the Americans themselves, due to the size of the economy and foreign trade activities, are insignificantly dependent upon external markets. The main flows of Chinese exports are delivered by sea. The United States, possessing the strongest navy in case of war, can easily cut off these flows.

Added to this can be that China's current account surplus in 2021 reached $315.7 billion, which is 1.8 percent of its GDP. In 2022, the U.S. foreign trade deficit was $948 billion, resulting in a current account deficit in the balance of payments. However, this deficit is easily covered by the inflow of foreign capital into the country. The United States are one of the most attractive and reliable markets for capital. By 2019, Americans invested $8.4 trillion in other countries, while other countries invested $9.9 trillion in the US, an increase of $1.5 trillion.

The same situation has occurred with assets (financial, securities, real estate): in 2019 the value of US assets abroad was $28.3 trillion and foreign assets in the US reached $39.2 trillion, an increase of $10.9 trillion. And the total value of China's overseas investments and construction projects since 2005 was more than $2.23 trillion, which was down by 3.7 times from an appropriate US figure.

Most of the US imports are consumer goods and automobiles. In so doing, the Americans are not wasting time and money producing simple products but focusing on more high-tech segments.

A huge advantage of the American economy is that its national currency is the world's main currency and dominates every aspect of global finance. Nearly 60 percent of the foreign currency reserves of the central banks of the world, essentially their rainy-day funds, are invested in dollars. The yuan occupies fifth place with 2.88%, just behind the euro with 19.7%.

In nearly all contracts, particularly for oil, prices are set and payments made in dollars. A share of the dollar in world trade is 60% and the yuan 4.5%. This is less than the 6% share of the euro. The dollar accounts for 65% of international debt and more than 50% of international credit. It is used as the nominal and settlement currency in most international financial transactions. The dollar's supremacy gives the US significant power and influence because the US banking system is always involved in dollar-related transactions. The US government can seriously punish countries by imposing sanctions that limit their access to global finance. In other words, the US government's fiscal and monetary policies affect the rest of the world because they affect the value of the dollar. This allows the USA to play a high role in global GDP and trade.

In a competitive world, a country's resource potential is important. It enables an economy to be self-sufficient and less dependent on external factors. In terms of the total value of natural resources, the US is second in the world ($45 trillion), behind only the Russian Federation ($75 trillion), while China, with $23 trillion, is in sixth place, behind both in total value and diversity of natural resources. Resource potential is particularly important in times of war. By isolating a country, the military industrial complex may be reduced, which will immediately affect the combat capabilities of a warring army. During the Second World War, the Allies, by isolating Germany from world markets, succeeded in reducing the production of military equipment, and by the middle of the war Germany was experiencing a petrol famine.

To conclude the economic review, no one in the world is particularly concerned about the prospects of a deteriorating economic situation in China. What Chinese companies produce and export can be produced at comparable prices and quality by many other countries in South or Southeast Asia and Latin America. And the state of the American economy worries the whole world because it is this country which largely determines their own well-being through a system of heterogeneous international economic relations.

The second most important factor enabling it to have global influence is the existence of the strong military that can promote the country's political and economic interests. In 2021 China's military spending totals $293.4 billion, and the number of soldiers in its army totals 2.035 million, while the US military spending totals $740 billion (2.5 times higher) and 1.4 million soldiers. In the Global Firepower ranking of the strongest armies in the world in 2023, the United States is in first place, and China is in third place. More than 50 different factors were taken into account in the calculation - from military power and finances, to logistics capabilities and geography of the country. The U.S. military is in first place because of its absolute superiority in air power and naval strength, while China is in third place because it has the largest army in the world - more than two million people.

The US has a massive advantage in nuclear arsenal and Beijing keeps the true parameters in this area secret. The commonly accepted figures are as follows: The US has 1,150 warheads, China has 300-310.

Also, the US Air Force leads with 13,247 warplanes as compared to China's 3,285. It has to be kept in mind that the American aircraft have the best technical characteristics in the world. The F35 is unmatched, and it is unlikely that competing countries will be able to create something similar in the near future. The fighter performs both abbreviated and vertical takeoff, so it is also suitable for the Navy.

The Chinese Air Force's J20 advanced model is powered by a Russian engine, as China is still in the process of developing its own engines and it is not known when it will begin commercial production, which is becoming a big problem in the competition. However, experts doubt that even after it develops its own engine it will improve the J20's maneuverability to the level of the F35.The Chinese are hiding the capabilities of their fighter, as it used technology similar to the US F22 and F35. As practice shows, copies are always worse than the original. Also, unlike the F35, the J20 is not multi-purpose.

Today, China is ahead of the US in a number of warships. As of the end of 2020, for example, the US navy had 297 and the Chinese navy 360, but the Chinese fleet lags far behind the US in terms of total tonnage: in 2019, the US navy had 4.6 million tons, while the Chinese navy had only 2 million tons.

According to the overall assessment, it is important to keep in mind differences in the type of ships of the two rival navies. The US Navy has many more "heavy ships" - aircraft carriers, missile cruisers and destroyers - while the Chinese Navy has many more "light ships" - frigates and corvettes armed with guided missiles. At the same time, the American "heavier," surface ships are equipped with 9,000 vertical-launch rocket launchers, the most advanced, while the Chinese have only 1,000. All of the US attack carriers are equipped with nuclear propulsion systems, while the first three Chinese aircraft carriers are equipped with conventional propulsion systems.

Moreover, all American submarines are nuclear-powered, while most Chinese submarines are diesel-powered. True, Chinese diesel-powered submarines are better suited for coastal warfare than for long-range ocean voyages to cut America's extra-long Pacific lines of communication. Also, the US fleet is made of 50 multi-purpose nuclear-powered submarines against 8 Chinese only.

There is no need in comparing ground forces, because the objective in military confrontation is not to occupy territories, but to cause great damage to the military infrastructure, which is enough to impose its conditions.  Naval and air forces will be used for this purpose.

The superiority of US armaments is obvious due to the fact that the US share in world arms exports is 31 per cent against China's 5 per cent.

America`s position is increasingly dominant by the fact that, unlike the Chinese, it has concluded military treaties and alliances and formed military blocs with several Indo-Pacific countries, including with Japan and South Korea on military cooperation and security; with Australia and New Zealand (1952). According to these alliances, an armed attack on any of the three parties would endanger the peace and security of the other states, and each of them must act to counter the common threat.

On September 15, 2021, the US, UK and Australia established a new military bloc AUKUS, the charter of which includes the transfer of atomic technology to Australia to increase its military power and with a view to confronting China. In the most critical cases, the US can rely on NATO support. China's development of similar alliances and blocs, even in the longer term, is very uncertain, as it has serious differences of opinion with most of its neighbors.

The qualitative gap between China and the United States is not the only weakness of China's military. In the last two centuries, the Chinese army has not conducted a single successful military campaign, while the US military has demonstrated its capabilities in two world wars, as well as in Afghanistan, Iraq, Libya, and Syria. In 1839 and 1856, Britain and China fought the famous Opium Wars, and both were lost to the latter.  Between 1883 and 1884, China lost the war to the French. China lost the war to the French for Vietnam, and between 1894 and 1895 to Japan, which resulted in the loss of Korea, Taiwan and two other islands. The Japan-China war of 1937-1945 was also a failure for the Chinese army (the Japanese occupied most of the coastal areas of China), until the Soviets joined in the war.

China's war against Vietnam in 1979 is also considered by many experts to have been lost by the Chinese armed forces. The past century witnessed several, mostly unsuccessful border skirmishes with the USSR and India, all of which would suggest that China is not yet ready, or afraid, for a long and grueling war.

The Chinese armed forces may protect its borders, but they are not enough to promote China's influence in the world, for unlike the United States which has 800 military bases in 100 countries, China does not have a single military base abroad from which to "project force". In order to take advantage of its economic and military successes in geopolitical competition, any country must have certain political skills and experience. Despite China's five-thousand-year history, the modern PRC was only formed in 1949 from a weak, decentralized state. As of the end of the 19th and beginning of the 20th century, the Qing dynasty China was in a serious crisis. The central government was powerless against foreign powers which settled their issues on Chinese soil and the numerous revolutionary organizations, which were combated by local militarist groups just nominally subordinated to the official authorities.

The Xinhai Revolution of 1911-1912 led to the fall of the Qing dynasty and the establishment of a republic in China. From then until 1949, the country was torn apart by a civil war between the Kuomintang and Communist Party supporters. In 1949, the communists finally won, and the remnants of the Kuomintang moved to the island of Taiwan. Only in 1971, with the help of the USSR China manages to take a place in the United Nations.

That is, from the last 200 years China has participated in world life only 52 years, mostly in the role of observer, and the intention to become a key player in the global governance of world it was stated in 2016 in Hangzhou during the summit of the "Big Twenty". This is very little to gain experience in the complex game of geopolitics, as modern geopolitics is designed so that it is impossible to extend its influence to any region alone.

At that, international political organizations are used to achieve this goal, and preferably to lead them. The advantage of the Americans is indisputable in this respect. In addition to NATO (which, apart from the military, has a political component), the United States is a member of the G7, which includes the most developed countries of the world: the United States, Canada, Britain, France, Italy, Japan and Germany.

As is known, political decisions and sanctions against Russia were endorsed by this organization and the EU, with which Washington cooperates very closely.

It should be recalled that at the last G7 summit in Hiroshima, Beijing's onerous investment policies in developing countries were criticized and assessed as economic coercion. G7 leaders reiterated their goal of securing up to $600 billion in funding as a part of a program aimed at providing countries with an alternative to Chinese investment. The U.S. is a member of the QUAD group (strategic dialogue between Australia, India, the U.S. and Japan on security issues in the Indo-Pacific region), which seems to concentrate the strongest countries in the region.

The participation of India, which has some territorial disputes with China, gives this alliance special importance. In turn, India has overtaken China in population and is rapidly catching up with it in other areas. However, China has the SCO (China, Russia, Kazakhstan, Uzbekistan, Kyrgyzstan andTajikistan) and BRICS (Brazil, India, China, South Africa and Russia) to its credit.

It is obvious that the SCO is significantly inferior to the unions where the United States participates. The BRICS grouping is made of countries with different political systems and interests, and has little in common with them. So far, there have been no significant political decisions by these unions to affect the international life of the world; however, there have been statements questioning their will. For instance, the South African President first announced that the International Criminal Court's decision to arrest V. Putin would not be enforced if he attended the BRICS summit in Johannesburg; later he reversed his decision as saying that Putin could be arrested.

Another indispensable attribute of a global leader is strong soft power, which combines three resources: culture, political values (in the US, democratic values disseminated by the government both inside and outside the state) and foreign policy, where the government uses all means of diplomacy to achieve its goal.

Many scholars are inclined to say that culture serves as a strategic resource for US foreign policy. American movies, music, TV shows, food and television productions have a huge impact on tastes, habits, thinking patterns of billions of people, including several generations of Chinese.

It has to be kept in mind that the main instruments of soft power are language, education system and student exchanges. According to Chinese experts themselves, there are 151 American and only 35 Chinese universities in the world's top 500. The 948,519 foreign students attend American universities each year, 290,000 of them come from China. There are 377,054 foreign students studying in China and about 300 million people learning English in China. There are 1.7 billion people worldwide who speak English, of which 375 million speak it as a second language of communication. At present, the number of learners of Chinese outside China is 20 million, and the total number of people who learn and use the Chinese language is approaching 200 million.

Note that economic resources can also enhance soft power. Confirmation of this is the use of incentives consistent with the concept of soft power. In 2020, the US, as the world's largest economy, spent $51 billion on economic and military assistance to foreign countries, covering 184 countries. In 2023, $10.5 billion will be allocated from the US budget for humanitarian aid around the world alone. America also has a large number of private foundations contributing to solving various problems of global importance. As major founders of the WB and IMF global lending institutions, the states can influence the provision of concessional loans, which is an additional instrument of 'soft power' in their hands.

The Chinese government and other channels are only in the beginning stages of providing such assistance. China began building its own soft power relatively recently. Confucius Institutes dealing with the Chinese language and civilization were set up in 2004, and 541 CCIs are operating in 162 countries and regions. There are 6 global news channels broadcasting 24 hours a day, including in English and Russian. China ranks first in the world in the number of foreign languages of TV broadcasting and TV channels. Tremendous efforts are made to promote Chinese cinema to the world market. It creates joint products with foreign studios and invites screen stars for a lot of money. However, the Chinese are faced with many obstacles on the way to competing with Hollywood. The language barrier and the still-tough policies of the ideological departments are among them.

In the meanwhile, the Chinese political system, which is designed for authoritarian rule, is not attractive to the world as compared to the democratic values on which the American state is based. The Chinese society is not as stable as it may at first glance appear, and the issue of the rights and freedoms of the forced laborers in Tibet and the Xinjiang province periodically unsettles the international community. So far, the central authorities have managed to keep the situation under control through tough measures.

At the same time, Beijing is in no position to free itself from the shackles of its imperial past, and it constantly raises territorial claims on its neighbors. China does not conceal its claims, even against Russia, periodically publishing maps of the Far East, indicating the Chinese names, including them in its area of interest.

Also, China takes every opportunity to expand its territories. For example, it is engaged in creating artificial islands in the South China Sea in order to expand into the region, which runs counter to the interests of Brunei, Malaysia, the Philippines, Taiwan and Vietnam. Demarcation of the borders with Kazakhstan, Kyrgyzstan and Tajikistan led to land acquisitions by China: Kazakhstan lost 1,357 sq. km, Kyrgyzstan 161 sq. km, Tajikistan 1,100 sq. km (0.77% of its territory).

An interview with the Chinese Ambassador to France did not go unnoticed, where he questioned the sovereignty of the former Soviet Republics. China's image is tarnished by the production of counterfeit goods and the appropriation of intellectual property.

Chinese foreign policy is best characterized by China's attitude towards Taiwan. Both countries are populated by ethnic Chinese. The Kuomintang civil war resulted in the Kuomintang relocating to the small island and establishing a republic based on democratic principles. They do not threaten the PRC, nor have the resources to do so. The territory of Taiwan is 0.37% of PRC territory.

In spite of all this, China is ready to use military force to annex the island against the will of its population. It is constrained by the position of the international community opposing it. China's position could be understood if Taiwan was occupied or under a protectorate of another country, or if it wanted to merge with another state. All countries in the world recognize China as one and indivisible, but oppose a forceful solution to the issue.

In this way, China's attempts to speak by the language of force with its compatriots are illustrative of its intolerance towards other visions, which alerts other countries and influences the choice of geopolitical partner. As compared to other nations, China is the only one acting in such a manner. For example, there are several Arab states on the Arabian Peninsula with their common history and language that founded several states, including dwarf states, but they are not pursuing the policy of annexation.

It can be concluded that the U.S. is economically, militarily and politically ahead of its rival and will remain the superpower number one in the near and medium term. The U.S. will most probably expand its presence in our region. We must take this factor into account.