United States And China: Who Is The World’s Hegemon?

Hegemony is created by political, economic, technological and military predominance. In a Harvard Business School case study, Jeremy Friedman analysed who will be the world hegemon in the future, as China may become the largest economy in the world by 2030. The German Foreign Minister expects China to “put its stamp on the world.”  However, Professor Rawi Abdelal of Harvard Business School, in the above case, questions China's capabilities, given its autocratic leadership. How right he is, emerged during and after Covid-19, can China bounce back be the trillion-dollar question now?

If several data points are examined globally, increasingly, China is seen as flexing its muscles worldwide. It boasts of being the world's largest factory and gives indications of dominating this planet with economics, technology and demographics. Yet it had its serious setbacks during Covid-19 and the massive fallout of its image and impact. 

No wonder Beijing, the topper of the number of billionaires globally, till 2022, has slipped three positions, says Visual Capitalist, in its most recent report. However, still retains its three cities among the top ten.  Hegemon USA's New York heads at 119 billionaires followed by London (97), Mumbai (92), Beijing (91), Shanghai (87), Shenzhen (84), Hong Kong (65), Moscow (59- I am sceptical of this, there must be more as each oligarch is one), New Delhi (57) and San Fransisco (52).

But the USA’s double standards in international fora are muddying its image. It walks away from international treaties, cuts all funding to UNFPA, quits UNESCO, leaves the Paris Agreement on climate change, exits the UN Human Rights Council and withdraws from the intermediate-range nuclear forces treaty and treaty on open skies. It also obstructs activities of the Biological Weapons Convention. It refuses to destroy chemical weapons & make the globe free from chemical weapons.

Through its massive debt and use of dollar supremacy, it prints dollars at the press of a button at 17 cents for a USD 100 note and makes the world dance to its tune. Such hegemony is not conducive to global public interest.

In 2007, China became the largest exporter in the world. Four years later, it took the mantle of being the largest manufacturer on the globe. Experts believe that by 2030, China may gain ascendancy over the USA in gross domestic product (GDP) too, as it touched USD 18 trillion today.

The crucial question is what are the indicators to decide who is the world's hegemon? While GDP serves as a benchmark, a penetrating analysis will need to look at several indicators to grade the world’s number one. With every passing year, China is adding titles in indicators and, therefore, inching closer to the target of numero uno. 

A Look at some of the indicators is examined below:

Mobile phones are ubiquitous. China today is several times bigger than the US in terms of share of mobile payments, due to its very large population compared to the US. It has invested USD 180 billion to deploy a 5G network. Global mobile subscriptions are 8.3 billion, of which China has 1.7 billion and India 1.13 billion, in 2022. 

In artificial intelligence (AI), experts are of the view that China will be the forerunner by 2030. In AI-related patent applications between 2016-23, China has gone up seven times, while the USA only doubled it. Already, in facial recognition technology, it is the world’s number one. It claims to have the largest number of smart cities and automotive cars. 

International Federation of Robotics shows that in 2022, out of a total of 3.9 million robots, China has 14 per cent at 0.29 million and was proceeding at a blistering pace. By 2030, the world's population is likely to rise from the present 6.5 billion to nearly 8.5 billion. Severe constraints on global food supply may emerge. The famous Science magazine predicts food riots in future. Here too, China may become the world's largest supplier of food, enabling it to dictate terms and prices. It boasts of lifting 800 million people above the poverty line, with adequate food supply to feed its population. 

China is the largest global buyer, demanding goods, and services worth USD 10 trillion annually. The only country with which China has a trade deficit today is South Korea. India has a trade deficit in the range of USD 70 billion with China. Will it redeem itself is what haunts the USA.

One indicator of trade supremacy is the number of container port traffic in TEUs. 2021 data shows China led from the front with 262 million TEUs, which is more than four times the size of the US's strength of 60 million. As a result, one-third of global container traffic is in China, 23 times bigger than India which languishes at 19 million. Singapore at 37 million, Korea at 29 million, Malaysia at 28 million and Japan at 28 million are way behind China. Future Hegemon will control the tentacles of sea trade worldwide, by the sheer size of its receptacles. 

Skyscrapers indicate the skyline of the country. Visual Capitalist's latest data shows China’s unrivalled dominance in this sphere which is visible with 12 of its cities donning 2,777 of them, while 13 big cities in the rest of the world have only 2350. Further, the area termed as Pearl River delta, comprising Hongkong, Shenzhen and Guangzhou boasts of 1,500 skyscrapers. Separately taken, Hongkong tops the list with 657 such tall structures and five other Chinese cities figure in the top ten viz Shenzhen (513), Guangzhou (254), Shanghai (250), Chongquing (205) and Wuhan (183). 

New York where it all started, has just touched 421, Dubai a tax-free haven produced only 395, Kuala Lumpur 211 and famous Tokyo just 200. Such monumental buildings are altering the skylines of megacities globally.

In drone delivery, China has acquired the second position, integrating it with the distribution channels of trade. China today delivers goods to thousands of villages using drones in far-flung areas. Chinese experts believe that the target is to service the entire population of China by drones to ensure quicker and faster delivery of goods and enable better and higher standards of living. Online rural retail touches the lives of 800 million plus Chinese daily, with a total business size of exceeding USD 200 billion. This is more than 4 times the size of Indian e-commerce.

In 2013, China and the US had reportedly 17 per cent of consumers having access to fibre internet connections. But by 2019, China rose to 86 per cent while the US reached 25 per cent. The former has 96 per cent of its villages having next-generation connectivity, with 22 per cent using 1 Gbps or more. In terms of fibre per kilometre per capita, the US and China are close at 1.34 and 1.3 respectively. They also have 85 per cent of their towers fiberised, according to a recent update.

In terms of satellite connection, the US leads with 4.7 million while China is behind at 3 million. As regards Public Wi-Fi hotspots (PWHs), China has 41.7 million PWH for its 1.4 billion population, while the US for 330 million, has only 7.5 million PWH, as per the latest press release.

Five top US companies, known by the title of FAANG (Facebook, Amazon, Apple, Netflix and Google) are competing with the largest four forms of China, popularly known as BATS (Baidu, Alibaba, Tencent and SNP). Amazon pumped huge investments in India. Promptly, China matched it through Alibaba. Global market Supremacy is, therefore, becoming another engine of hegemony. Another green indicator is traditional bicycles including e-bikes. China sold 30 million bikes domestically in 2018, but to capture the world market, it exported 80 million bikes to all corners of planet Earth. These examples are multiplying. 

In terms of rare earth production which is vital for manufacturing sensitive products, China controls 85 per cent of the world supply. The US is trying hard to drop its dependence on Chinese imports, but China is merrily buying mines of important metals wherever it can lay its hands. Whether it is graphite or vanadium or cobalt, required for leadership in battery production globally, China is leading. It has become the largest manufacturer of lithium-ion batteries which will fuel all electronic vehicles, and several electronic products in the future. 

The US opened its gates for 76 million tourists in 2023. China had attracted 61 million tourists in 2019 but has dropped sharply in 2023 to 35 million, after Covid and the massive negative publicity it generated. This is an indication of China going backwards, after a solid front-foot batting.

The World Beyond

Will the traditional GDP yardstick be breached by China, by 2030?  China may account for one-third of the world’s GDP if it does not do self-goals. It has 100 cities with a million or more population today and three out of eight cities in the world exceed ten million population. By 2025, it is expected to have 221 cities with a gross population beyond one million. At that time, this would be about half the number of cities globally with one million plus population - 500 cities to be precise. 

Just seven Chinese cities namely, Shangou, Suzhan, Hangzhou, Wuxi, Nantong, Changzhou and Nanking account for a GDP of about USD 3 trillion, which was equal to India’s GDP in 2022 with 6,000 towns. Its steel exports were strongest since 2016 with 9.9 million tonne shipped in March 2024, about 25 per cent higher than a year earlier.  China’s prolonged property crisis has plummeted demand for steel at home and hence all is not well for it.

Economist reports that China wants to become a leading scientific power. In the first 16 years of the century, China’s R&D expenditure has jumped 10 times resulting in several firsts for the country. Today, it has the world’s largest radio telescope and the world’s largest particle accelerator. It has the world’s second most powerful supercomputer. It is one of the few countries to have underground neutrino and dark matter detectors. It has started the world’s largest genome sequencing centre. 

It has tried to become the biggest nuclear power producer, adding 15 nuclear reactors to the strength of 43 and not stopping before putting 43 more as work in progress. Visual Capitalist's latest data reveals that the USA produces 772 TWH of nuclear energy, while China is hovering at half of that, at 383 TWH.

But here again, it's speeding this process rapidly. As regards global oil production, the USA tops the list at 12 million barrels a day, while China is at one-third, of that 4.2 million. 

The Space War

China did 38 orbital launches in 2018 surpassing 34 of the US, thereby creating a real threat in the space of Space. The Commercial Aircraft Corporation of China is making C-919 commercial aircraft to replace the Boeing 737 in China. If they succeed, they will hit the monopoly of Boeing and Airbus.

China showed that it wants “half the moon”, when it landed its spacecraft in January 2019 on the moon's earth-facing side. How and how far this scientific conflict will grow, between the two giants, remains to be seen. 

The US considers China to be the most comprehensive threat because of the “Made in China 2025 Plan” encompassing building world-class firms in ten high-technology fields. The US feels that crucial technologies, like chip making and 5G, have equal implications for trade and national security. The USA has put 1,000 Chinese companies on sanctions lists. It has told Japan & Netherlands, to restrict exports of chips and technology and equipment related to it, to China.

The US passed the Chips and Science Act to beat China by creating a “high fence”, building a resilient supply chain and maintaining national security, as it was slipping in chip production badly to one-fourth of its size, 30 years ago. Now, American companies are reducing investments in China Hongkong and Macau. However, China manages to make the USA vulnerable by pushing its technologies into the USA through other countries, manufacturing partners and channels. This new Act will help bring down the USA‘s, China-related risks, both in the short term and long term.

The US accuses China of hacking and stealing secrets in several sectors like aviation, space, pharma, oil and gas, maritime and other technologies. It is clear that the world Hegemon is sensitive to its exorbitant threat from China, and wants to contain it in all possible ways. 

Friedman, in his Harvard Business School study, focuses on the power of the US as a hegemon. After the First World War, the US developed the largest financial muscle with the dollar as a reserve currency. But China’s official forex reserves stand at an all-time high at USD 3.24 trillion, in March 2024, the People’s Bank of China chose 21 banks to upgrade their technology through suitable projects, with a re-lending fund of USD 69 billion.

To wield more economic power, it initiated the Asia Infrastructure Investment Bank (AIIB) and energised the Conference on Interaction and Confidence Building Measures in Asia (CICA). It partially succeeded in its attempts to shape the regional order, but then fell foul with many including India. Its Belt and Road Initiative, amounted to high-interest loans of over USD 1 trillion to 150 LDCs and some developing economies, with Zambia heading the list at USD 17 billion and becoming its puppet.

But such huge financial influence is also not catching desired speed, because of huge mistrust now.

The USA has amassed enormous global security through 800 military bases in 70 different countries. Its military expenditure is more than the combined expenditure of the next ten countries including China and India. China‘s military spending is one-third of the US. But China today maintains the biggest naval fleet strength, with 64 research vessels which are snooping and collecting data. It provides arms to countries like Bangladesh to meet 66 per cent of their needs and in return creates a naval base to dock six submarines and eight warships simultaneously. 

As one expert says, China’s doctrine is to “create noise in the east and strike in the west”. It usurps assets by building white elephant projects in Asia, like the airport in Sri Lanka, which an Indian Russian JV will manage now. It also delays on restructuring of loan requests by countries indebted to it, despite the havoc caused by Covid-19 in these countries.

China In The Current World

China today possesses hypersonic missiles and is achieving technological breakthroughs repeatedly. Experts believe that China’s new anti-carrier weapons affect the USA’s plans in the Western Pacific region. China’s anti-satellite systems are obstructing the USA’s global surveillance and communications capacities. China’s cyberspace operations are a “menace” to the USA’s government tasks and homeland security.

Some experts feel China may have a majority influence over Asia and a partial hegemony in the developing world through its favours to their economies. Global governance and control of international institutions will be resisted by the rest of the world, after the disastrous consequences of China-generated Covid-19. PLA may want to create a potent force in the new space of space, poles and deep sea and hence work to surround the globe first through regional hegemony, then global. 

However, rapid events show that China is losing its credibility fast enough to go slow in all such ventures. It is no longer sought after by many nations and alternatives are being explored around the globe.

Seeing the geopolitical situation and despite huge differences, like China offloading USD 23 billion worth of US treasury bills recently, the USA and China are sitting for “extensive exchanges on balanced growth”.The Treasury Secretary went to China to push for a level playing field for American workers and firms. 

She also prevailed upon China to reduce their subsidies on renewable energy sources, EVs and batteries as it can threaten competition severely, throughout the world. Both have realised a “more stable footing “in their relationship is imperative, if urgent global challenges must be addressed.

To avoid global recession, the world needs both giants USA and China. Experts talk of a USA-China duopoly in the world economic system. However,  in G20, China‘s obstructive attitude was seen from its absence at New Delhi meetings. It's creating a separate block with Russia. Putin and Xi are testing the dollar’s resilience. Ali Baba is developing the Russian ecommerce market and Siberia is supplying natural gas and LNG to China, all to depreciate dollar dominance.

China and Russia, according to Michael Ignatieff, have survived US Sanctions by tapping new markets in Latin America, Asia & India. They know where the shoe pinches for the USA. The chances of both teaming up against the USA militarily are remote, but if they do WW3 is certain.

Abedelal has issues with China, as he calls it an autocratic leader, creating global mistrust by curbing human freedom. Its focus on bilateral trade is against the principles of globalisation. It is encouraging fear in Asia and Africa and infringing on the territorial integrity of its neighbours. Hence, its global economics and dynamics will prevent the yuan from ever becoming a reserve currency to threaten the dollar. How true it is fanning it out is getting clearer & clearer at the beginning of this decade.

The USA is realising India’s importance in countering China & has created a China plus one strategic position. It is investing $ 700 billion in India to create an alternative supply chain. Experts feel India USA's opportunity for ESDM (electronics systems design & manufacturing) trade, can reach $ 200 billion by 2030, despite total trade of only $ 128 billion at present.

The USA is gearing up with India for massive army exercises scheduled for September 24 with “Stryker armoured vehicle testing for altitude warfare”. Climate financing is also an important facet of this partnership with a $ 390 million fund being created to deploy 10000 e-buses all over India, to underwrite lenders & help India reduce its carbon footprint.

The USA is also partnering with Taiwan in an attempt to globally reorganise electronics and ICT supply chains, bereft of China. It became its top Importer of these products in the last 4 months ahead of China. Professor Abdelal‘s telling comment is that “Conscience and concessions are both required to become a world hegemon and China has none”. 

Dan Bradbury feels that “China won’t end the American century” nor can it overtake the USA's hegemon status because the USA comprises of all its allies like Nafta, the UK, Canada, Australia, New Zealand, Nato, Japan, South Korea, Taiwan and the Philippines. The USA assuages the fear of China for all these nations.

Interestingly, the European Union (EU) is working hard, according to Richard Heydarian, to become less vulnerable against China. It’s pumping in USD 330 billion-plus in the Global Gateway Project to counter China’s massive economic funding of Info Pacific. The EU is mustering its capabilities to act against China and Russia.

China and the USA are the two most powerful countries today, there is no denying this fact. The hard and soft power of both affects the world enormously. Economically too, both can derail global economic standing. The critical mass is when the water goes above, while using these powers to coerce others to acquiesce, creating conflict and tensions as are seen in Ukraine, Israel and sea routes.

There are then three scenarios, to my mind in future. The USA uses all its might, in all ways to remain the hegemon that it is. China flexes itself economically, militarily and politically to gain ascendancy and become the new hegemon. As Ambassador Freeman remarked “There will be no hegemon and no G2”

The world has to wait and watch this remaining decade and the next two till 2050, to see what unfolds. Globally, scenario three above creates equilibrium and sanity. But does it satisfy egos?

J.K. Dadoo

Guest Author The author is a retired IAS officer