Peterson Institute for International Economics Book Asserts China Will Eclipse United States

Sep 28, 2011, 16:33 ET from Peterson Institute for International Economics

WASHINGTON, Sept. 28, 2011 /PRNewswire-USNewswire/ -- China's economic dominance is likely to be more imminent, broader in scope, and larger in magnitude than generally believed. Eclipse: Living in the Shadow of China's Economic Dominance argues this dominance is a product of historical forces, economic policies and objectives laid out by China, and the United States cannot do much about it. PIIE's Arvind Subramanian challenges a widely held view that the right set of economic policies can retain the United States' position as the most economically competitive and powerful nation in the world.

Eclipse has won praise for its use of history and political analysis, making it accessible to a wide audience. Bob Davis wrote in the Wall Street Journal, "Parts of Eclipse read like a wonky version of Rising Sun, Michael Crichton's 1992 novel of Japanese dominance over the U.S. when Tokyo was seen as speeding toward number one. But Subramanian is a first-class economist who uses his book to discuss provocatively U.S.-Chinese relations and the nature of economic power."

Dominance is more China's to lose than America's to retain, says Subramanian. He finds a combination of internal economic weakness, external vulnerability and the presence of a rival power can alter the status quo. In the current situation, this vulnerability would be to a dominant power, which is not only not an ally, but also a country that has yet to sufficiently reassure the world about its internal politics and external ambitions. The prospect of being at the receiving end of a less-than-benign exercise of power by China should serve as a loud wake-up call for the United States.

In addition, the survival of the open and rules-based economic and trading system is a potential concern. China's increasing importance in world trade has generated a large and growing private constituency benefiting from its economic and trade relations with China, and hence a stake in maintaining that relationship. China is so dependent on trade as an engine of growth and continual improvements in living standards, it has an incentive to maintain relative openness. This does not mean there will not be frictions with China over parts of its economy that are closed to imports of goods and services, and such issues as currency values and intellectual property rights, but China's future dominance need not pose a threat to this system.

SOURCE Peterson Institute for International Economics