Comparing US and China: The Battle for Global Superpower Status
The global balance of power is influenced by numerous factors such as economic strength, trade, and a country's defense-industrial base. At the forefront of this power struggle are the United States and China. While both are considered global powerhouses, the sources of their strength differ significantly. The US holds a dominant position in capital markets and its reserve currency status remains unchallenged. On the other hand, China's influence in international trade has surged, making it the top trading partner for 120 countries worldwide.
This article explores the comparison between the US and China across eight key measures of power, based on the analysis from Ray Dalio’s Great Powers Index 2024.
Methodology: How to Measure a Nation's Strength
Ray Dalio identified eight core pillars to measure a nation's strength. These categories include trade, innovation and technology, education, economic output, military, financial center, competitiveness, and reserve currency status. The scores for these categories were calculated using Z-scores, which indicate how far a data point is from the average of the dataset.
US vs China: Who Holds More Power?
The comparison of the US and China across each metric of country power in 2024 reveals that the US (with an overall strength score of 0.89) slightly edges out China (with a score of 0.80). Both countries show close competition in areas like innovation and technology and economic output, but significant differences in reserve currency status and overall competitiveness.
In the field of tech and innovation, the US houses the world's largest tech companies driving AI advancements. However, China is rapidly developing intellectual property in new industries such as semiconductors, electric vehicles, and advanced manufacturing.
Economic Output and Strength
The gap between the GDP of America and China is approximately $10 trillion. China could potentially surpass America's economy by 2035, assuming a 5% annual GDP growth. However, Ray Dalio's estimates of 10-year real GDP growth place China at 4% annual growth. China's fragile property sector and weak consumer demand pose significant challenges to its future growth prospects.
Education
While concerns surround America's stagnating high-school educational system, its top-ranking universities play a crucial role in its education score. Conversely, China is home to 100 elite universities, but it also has an unequal education system that disproportionately impacts lower-income households.
Military Power
The US has long been a global leader in defense spending, outpacing China by more than twofold as of 2022. However, this position is deteriorating. Today, China's military modernization means that its defense capabilities are on par with America, and perhaps even greater according to sources like the Global Firepower Index. Furthermore, China is growing alliances with Russia, Iran, and North Korea through arms transfers and battlefield exercises, posing a greater risk to America’s military dominance.
Bottom Line
The comparison between the US and China in terms of global power is complex and multifaceted. Both nations have their strengths and weaknesses, and the balance of power could shift in the future. What do you think about this comparison? Do you believe the US will maintain its superpower status, or will China eventually take the lead? Share your thoughts and this article with your friends. Remember, you can sign up for the Daily Briefing, which is delivered every day at 6pm.
