Written By: Susan Smithfield – Corporate Finance
For a country to become a superpower, it must have the capacity to dominate and influence more than one region of the world at a time. Lyman Miller, a research fellow and associate professor at Stanford University, identifies four marks of a superpower, including economic and military prowess, a robust political system and cultural power. A superpower country must not only command political and social-cultural influence but should have the authority to dictate business for other nations.
Looking back at history, Britain, which was a superpower until the 1950s, started declining after almost becoming bankrupt during the Second World War. Even with the economic decline, the country maintained its position as the leader of the world, and it was not until 1956 that the reality of its lost grip became imminent. During this period, Britain decided to invade Egypt over the Suez Canal crisis. The United States, with the support of the United Nations and the Soviet Union, opposed the move, forcing Britain and its allies to withdraw. According to historians, the submission of Britain to the US signified the end of its regime as the leader of the world. America, which had gained superiority and influence due to its robust economic, political and military growth, took over as the new global superpower.
Today, America still prides itself as the leader of the free world, but it may not be for long. Christopher Layne, a senior professor of international affairs at the Bush School of Government and Public Service, argues that the United States has lost its global dominance to China due to its declining popularity as a result of its failed policies in international relations and its tendency towards unilateral decision-making. Moreover, the US contribution to the global economy has fallen by almost 50 percent since the 1970s, as most of its industries and businesses have moved overseas.
China is taking advantage of lost American ties and businesses, putting itself in first position as the world’s largest exporter. The high cost of American manufacturing and labor is to blame for sluggish growth and fading economic supremacy. Also, Chinese firms have been buying US companies and importing labor from home to work for these enterprises. The Chicago Stock Exchange, one of the oldest bourses in the US, has recently been acquired by a Chinese-led group of investors, a situation that analysts believe will give China a footing in the US stock market. Other examples of large American firms bought by the Chinese include the Starwood Hotels, General Electric’s appliance division, Terex Corp and AMC Entertainment Holdings.
As China continues to establish its presence all over the world, the US is cutting ties with most countries, especially those in emerging markets. A recent Pew Research poll shows that more than 60 percent of the American public would prefer the US government to focus its efforts on national problems and leave other countries to mind their own business. With the lack of public support, the United States government has failed to sustain its costly and ambitious foreign policy.
China, on the other hand, has gained influence by taking over a majority of the roles played by the United States in India, Africa, Europe, Latin America and Australia. The US dollar has long been the only global reserve currency, but with the emergence of China, the renminbi is taking over. The International Monetary Fund has already approved the yuan as a major global currency and will be adding it to the special drawing rights (SDRs) basket of currencies in two months’ time. Even though the dollar accounts for 81 percent of the world’s trade finance, the rate at which the yuan is gaining market share is alarming. If China keeps its pace in extending its influence all over the world, then the renminbi might take the US dollar’s position within the next 10 years.
While some famous US politicians are turning a blind eye to the reality of climate change, China has taken a position as the global leader in renewable-energy investment. At its current pace, it is estimated that by 2050, 30 percent of the country’s energy will come from renewable sources. Unlike the US, China is seeing the economic opportunities in the climate-change market and is already asserting itself as a major supplier of clean-energy products. Apart from its economic gains, the emergence of China as a world leader in clean energy is giving it commanding influence within countries that are transitioning to green innovations as their sources of energy. In the majority of developing countries, China is already implementing massive green-energy projects while eyeing other opportunities to assert its dominance. By the look of things, these strategies to unseat the mighty have been laid, and it may be only a matter of time before China takes over the world!