China is catching up to us
Imagine what it would mean if a company controlled by an adversarial government like the People’s Republic of China had authority over something essential to our modern lives, such as the global semiconductor industry.
It could happen if China is allowed to take control of Taiwan. An American named Morris Chang founded the Taiwan Semiconductor Manufacturing Company, or TSMC, in 1987. It’s now a global juggernaut valued at nearly $1 trillion, and produces 90% of the world’s most advanced semiconductors.
Semiconductors run almost every electronic device we use daily. Phones, tablets, car displays, even our refrigerators require them. Now think of what it would mean if TSMC were controlled by China. Americans got a taste of this kind of dependence during the COVID-19 pandemic, when we suddenly discovered that our nation’s medical supply chain — everything from basic medicines to face masks and dress gowns — relied heavily on Chinese suppliers.
This threat to our way of life is why the United States needs to urgently prioritize the so-called China challenge, the generational task of competing with — and containing, when necessary — the rising authoritarian behemoth across the Pacific. The task is not one of a simple policy alteration, but of an all-societal undertaking.
Former U.S. Rep. Mike Gallagher of Wisconsin, who served as chairman of the bipartisan House Select Committee on the Chinese Communist Party, put it starkly last year: “This is an existential struggle over what life will look like in the 21st century, and the most fundamental freedoms are at stake.”
Americans proudly regard our nation as the undisputed global leader by almost every metric: We are the largest global economy, we have the largest global military, we are the envy of the world in education and science, and so forth. While this may have been the case in 1994 when we emerged triumphant after the Cold War, it is no longer true in 2024.
The U.S. economy is still the world’s largest, valued at over a quarter (26.3%) of global gross domestic product, according to data from the International Monetary Fund. That’s around the same as at the end of the Cold War. But when adjusted for power purchasing parity, China (19%) is now ahead of the United States (15%), according to the IMF.
That’s a stunning reversal: The United States led China by nearly four times (19% to 5%) in 1994. While GDP is by no means the only metric that matters for economic success, the trend is clear, and it’s not in our favor.
The U.S. military is still the world’s largest. In fact, we spend more on our armed forces than the next nine nations combined, according to figures from the Stockholm International Peace Research Institute. But the numbers don’t tell the entire tale, certainly when it comes to China.
When accounting for various economic adjustments, “unaccounted expenditures,” and power purchasing parity, China’s military budget is now nearly equal to that of the United States, according to the American Enterprise Institute. This spells trouble for the United States and our allies, as evidenced by China’s unprecedented military buildup over the last 30 years.
China is catching up fast to the United States in scientific prowess, too.
The U.S. “has failed to keep pace with science and technology spending relative to China,” according to the Science and Technology Action Committee, a group of leading U.S. academic and corporate leaders.
This trajectory is disconcerting but not inevitable, especially since China’s own economic and demographic challenges are daunting.
While the United States cannot change Beijing’s intent to dominate the world by 2049, we can change how we respond. Like a boxer before a title fight, America needs to show up with the best version of itself to compete — and prevail — against its greatest geopolitical rival of the 21st century.
To do so, we must lead with our values of freedom and democracy, reinvest in our domestic competitiveness, rebuild our national security defense base and compete with China’s global geostrategic initiatives. We must also work with like-minded allies to deter China on issues ranging from Beijing’s support for Russia’s war in Ukraine to bullying its neighbors like Taiwan and the Philippines.
The stakes are high. If we succeed, this century will still be the American century. If we don’t, an aggressive, expansionist and mercantilist power in Beijing will successfully replace the U.S.-led global order with its own authoritarian version. We must not let this happen.
Igor Khrestin is the Bradford M. Freeman Managing Director of Global Policy at the George W. Bush Institute.
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