America no longer number one

America: your days as a global superpower are numbered

We've seen it before: the Roman empire fell, then the British. America's economic dominance could be about to end - and China is taking its place.

Not so bullish anymore. Photo: Alamy

The Telegraph,

12 September, 2014

They say what goes up must come down. It’s been true of every global superpower throughout history, and now it’s coming to America.

Within the next five years, China could account for a larger share of global GDP than any other country and knock the US off its perch as the world’s biggest economy, according to analysts at Deutsche Bank.

“Based on current trends China’s economy will overtake America’s in purchasing power terms within the next few years,” Tim Reid of Deutsche Bank wrote in a research note. “Given this analysis it strikes us that today we are in the midst of an extremely rare historical event – the relative decline of a world superpower.”

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The US’ economic prowess has been waning since the 1950s, but the downturn has sharpened over the last 15-or-so years. Part of this is due to internal political and economic issues in the US. Political polarization in the US is at its highest level in decades, economic confidence is drooping and most Americans are no longer in favour of international military intervention - once one of the pillars of American freedom and might.

As Reid points out, America’s share of world output, on a purchasing power parity basis, has already slipped below 20pc, which has historically been the marker of a global superpower, from the Roman to the British empires.

But this is not just the story of America’s decline. China is on the way up - and could account for more of global GDP than the US by 2018, according to the IMF's World Economic Outlook index.

Another report, released earlier this week, said that China's nominal GDP will overtake that of the US by 2024, buoyed by a three-fold increase in consumer spending.

“China has begun to return to the position in the global economy it occupied for millenia before the industrial revolution,” Reid wrote, adding that China is on its way to overcoming the “centuries-long economic underperformance” that has held it back until recently.

. Highcharts Cloud Beta

Of course, size isn’t everything. The report also points out that America’s global footprint - from McDonald’s to Hollywood - faces little threat from China, which still has internal problems such as poverty to address before looking outwards. At least on this count, though, America will no longer be number one.