Tipped Power Balance: China’s Peak and the U.S. Resilience

Balance of power shifts, sometimes quickly and dramatically. Three years ago, President Xi Jinping introduced the concept “The East is Rising, the West is Declining” (东升西降) to signify that China, having risen and rejuvenated, was poised to supplant the declining Western civilization, represented by the United States. President Xi Jinping had ample reasons for his confidence. By then, China had navigated through the turmoil and trepidation of the coronavirus outbreak, establishing itself as a new safe haven for those escaping COVID-19. While other countries still grappled with the pandemic, China stood out as the only major economy to post positive economic growth in 2020. This upward trajectory extended into 2021, with the economic growth rate climbing to 8.4 percent—marking the fastest expansion in a decade.

Bolstered by the pandemic’s containment and swift economic recovery, China began to augment its soft power and international influence by promoting the “China solutions” to the pandemic and practicing “mask diplomacy” and “vaccine diplomacy.” Until fall 2021, China was the world’s biggest COVID-19 vaccine exporter. According to a survey conducted by the Singapore-based ISEAS-Yusof Ishak Institute (ISEAS), in 2021, China was perceived as the most generous provider of COVID-related assistance in the region. By the end of 2022, Beijing had distributed 2.18 billion doses of the vaccine to 119 countries.

The resilience and strength demonstrated by China starkly contrasted with the United States., which faced a combination of political, economic, and diplomatic challenges when facing the pandemic. In light of both hard and soft power setbacks, U.S. think tank leaders warned that the country might encounter its “Suez moment,” referencing the historical event in 1956 that marked the decline of Britain as a world power. While fighting the pandemic, the United States also had to address a faltering economy, which contracted by 3.5 percent in 2020. Under President Donald Trump, the U.S. battle against COVID-19 not only turned out to be a much more deadly and divisive process, but the United States also retreated from many of its global commitments, notably terminating its relationship with the World Health Organization.  

Within a span of no more than two years, however, the dynamics of power balance took an opposite twist. The U.S. economy fully recovered all pre-pandemic GDP losses by 2021. In 2022, it attracted nearly 50 percent more foreign investment than China. Economic growth remains strong through 2023.  Indeed, the United States has undergone the most robust recovery among the G7 nations, as measured by GDP.

As the U.S. economy roared back from the pandemic shock, China’s recovery faltered. In 2022, it could only muster an annual growth of 3 percent. After it reopened in December 2022, the anticipated swift and sustained economic recovery failed to materialize. A mass loss of confidence has ensued among consumers and investors. The government reported a 5.2 percent GDP growth rate for 2023.  When measured in U.S. dollars, however, its GDP actually saw a decline of 0.5 percent from 2022. The GDP gap between United States and China widened significantly from $5 trillion in 2021 to nearly $10 trillion by 2023.

Alongside the economic downturn, many of China’s soft power gains during the pandemic evaporated following the abandonment of its zero-COVID policy. The once-lauded “China solution” to the pandemic ultimately backfired, leading to more fatalities in two months than the United States experienced over three years. In addition, the appeal of its vaccines diminished quickly with the rapid spread of highly transmissible Delta and Omicron variants. Consequently, there was a steep drop in the global delivery of Chinese vaccines in fall 2021.

The waning of China’s influence is apparent in Southeast Asia, where China continues to be seen as the most influential economic and political-strategic power. Survey data indicates a dramatic drop since 2022 in the percentage of regional elites viewing China as the most influential, while the perception of the United States’ influence has been steadily on the rise. From 2020 to 2023, the proportion of people viewing the United States as the most trusted power surged by more than 20 percentage points.

The bleak picture on China’s economy has sparked a debate on whether China has peaked. Optimists caution against hastily concluding that China’s economic growth has plateaued. However, even in the best-case scenario, China’s ascent to surpass the United States as the world’s largest economy will take longer than previously anticipated. Assuming a 5 percent annual growth rate, China might not overtake the United States until 2035. Some analysts even argue that China’s economy may never surpass that of the United States. When considering further the vast soft power and geopolitical advantages the United States holds over China, it appears unlikely that China will displace the United States as a leading global power in the foreseeable future. This view is echoed by Yan Xuetong, a prominent Chinese international relations expert, who has stated that the gap in national strength between China and the United States will only widen in the coming decade.

This development calls for a reevaluation of the U.S. policy towards China. For over five years, U.S. China policy has presumed China as a relentless growth juggernaut. A closer look at the dynamics leading to the decline in China’s relative power, however, uncovers deep-rooted barriers—individual, structural, and institutional—that impede its international ascendance. Moreover, a strategy excessively focused on competition incurs high costs and forsakes the huge benefits of bilateral cooperation, which is crucial for tackling global challenges such as climate change or pandemic response. In the evolving geoeconomic landscape, China’s internal and external behaviors may shift, driven by concerns that its strategic window of opportunity is closing. This fear and anxiety are reflected in the government’s crackdown on negative commentary over China’s economy, as well as in the Chinese leaders’ repeated warning against “decoupling” from China.  Thus, the notion of China being a “peaking power”—a nation whose economic expansion has slowed but not stopped, may merit more attention than simply viewing it as an unceasingly ascending power.