Since World War II, America has been the world’s biggest trading nation. Last year, according to official figures, China has surpassed the United States by one measurement, the exports and imports of goods. China has reported that its total combined trade in goods with other nations is $3.87 trillion; according to the US Commerce Department, America‘s numbers for the same thing was slightly less at $3.82 trillion.
The US economy remains the largest in the world by a wide margin. When services are included, America has a trade total of nearly $5 trillion. Also, America’s gross domestic product is more than twice the size of China’s. Given the difference in population size, Americans remain much wealthier than their Chinese counterparts.
However, it cannot be denied that recently the United States has lost ground vis a vis China and can expect to continue this trend. After World War II, America virtually forced the rest of the world, thanks to our pre-eminent military and economic force, to dismantle much of the trade barriers that were in effect prior to the 1940s.
After Mao’s death in 1976, the Chinese leaders decided to stop its isolationist policies and amplify trade with the rest of the world. In 2009, China became the world’s largest exporter, and maintains a large positive balance in trade.
Two factors could impinge on China’s continued economic growth. One is if the American populace resentment of Chinese low wage and protectionist policies somehow eventually makes it way to the attitudes of our nation’s leaders. Unfortunately, this is unlikely, since political elites from both parties are bought and paid for by powerful interests who could care less about the wage pressures that are put upon the American middle class.
The second hazard faced by China is much more likely, indeed it is almost sure to eventually occur. In China, almost all of the economic growth has occurred at the population centers along the seacoast. Meanwhile, in the interior, people remain immersed in poverty. Eventually, this will cause political pressures which will be difficult for Chinese leaders to navigate. They might be forced to liberalize domestic policies to share the wealth more than it has in the last 30 years. This will cause the nation to export less; instead it must provide goods to its land-locked regions.