It is widely accepted that the United States should compete economically with China, even if it sometimes feels like it is competing on one side. What is still outstanding is how or who is likely to win. As the fallout from China's mismanagement of COVID fades away, China's economy will recover in 2023 and 2024 to applause from Wall Street and US tech companies. When that happens, it may appear that the US is failing to keep up with China. But a better direction appears for the United States in the long run. The economic assets and to a lesser extent the associated policies show that the United States always outperforms China. The key
question is not who will win the competition, but whether the United States will take advantage of the clearly superior position and put the People's Republic of China far behind. Economic comparisons usually begin with the size of a country's economy and the prosperity of individual citizens as expressed as a fraction of gross domestic product (GDP). But size and prosperity are the results of the flow of development policies and four basic characteristics of the economy: labor, capital, land and innovation. These are the sources of growth no matter how it is measured. The United States and the People's Republic of China are the largest economies in the world. However, both suffer from serious shortcomings in a vital area: the need for a skilled productive workforce. A young and emerging workforce can be intimidating in a society that does not have enough jobs for future workers. The People's Republic of China met this challenge in the 1990s and 2000s, and it was very met, but now it has a larger and older workforce. Indeed, China's labor force has been shrinking for a decade. And GDP growth is, accordingly, much slower. And the problem will get worse. And while China's data can be dubious, even China's tightly watched National Bureau of Statistics admits that the labor force peaked in 2015 at 801 million people and has steadily decreased to 780 million in 2021. Building population refers to around 100 million people. Others will leave the workforce over the next 20 years, with exit accelerating in the 2030s. The view is similar through another population lens. Japan's lost economic decades date back to the early 1990s, when the average lifespan was 37 years. Now, the Chinese average age is 38. The current average life expectancy in Japan will be 49 years, and China will reach that in 20 years. A vastly smaller and older Chinese workforce will be a major impediment to restoring the production that the United States has lost to the People's Republic of China since it joined the World Trade Organization in 2001. But there will be a major hurdle. Not that all jobs will go elsewhere. Mexico, and almost every other country, is too small to accommodate them. Even India, which in theory could create that many jobs, has a labor force participation rate much lower than the People's Republic of China or the United States. In fact, it's lower than the global average, and it's been declining over the years. • It should be noted that one of the reasons for the decline in the US employment rate is population aging. • The United States must keep up with the issue of skilled labor to achieve reproduction within its territory. • China is working to achieve technological sovereignty and advanced industries, but the matter comes at the expense of Washington, and this competition will continue. • The United States is not ready for a prolonged economic war with China.
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