International Political Economy

Christian Laurence L. Eugenio April 6, 2019

AB Foreign Service FS301 Mr. Jumel G. Estrañero

PAX AMERICANA AND SINO GAME THEORY: THE POLITICAL ECONOMY OF

POWER SHIFT PARADIGM

Abstract

The purpose of this study is to analyze the political economy of the power shift
paradigm between United States of America as the global hegemon and China as the
challenger to the Western world order. Qualitative research methods of historical and
literary approach are used to do a comparative analysis of the United States and China
in several metrics that indicate national power. After collecting and analyzing the
required data, the study concluded that China still has a long way to go close the gap
between United States and that the power shift between the two nations have greatly
influenced the political economy of the liberal world order, particularly in democracy.

I. Introduction

Power is an integral concept in theories of international relations and studies of

political science. Simply put, power is defined in terms of control over material
resources: the bigger the state is in terms of economy and military, the more influence it
has on the weaker and less developed states.1 Realist theories state that power dictates
the nature of the states to achieve self-interest in international politics. The concept of a
global hegemon that influences the dynamic of power among states explains the shifts
of the world order through time.

During the post-war era, the United States became the global hegemon because
of its unmatched economic, military, political and cultural influence in global affairs. The
Western global order which was characterized by liberal ideologies and free capitalist
economy has shaped the international community into what it is today.2 Advancements
in technology and industry helped the United States position itself at the top of the
global hierarchy ahead of the Soviet Union and the British Empire after World War II.
The development of transportation and communication systems created new means of
acquiring military strength, establishing the United States as the most powerful in the
world. Since the post-war era, it has led the creation of international organizations such
as the United Nations, International Monetary Fund and World Bank. The United States’
1 Manjana Mikloreit, “Global Power Structures – (How) Do They Matter?,” Negotiator Briefs on Cognition
and Climate Change, no. 4 (December 2013): 1, Accessed on March 31, 2019,
http://wici.ca/new/wp-content/uploads/2013/12/CCC-Brief-No-4-Global-Power-Structures-reduced.pdf
2 Abdul Salaam Khan, “Is Growing China A Real Challenge To The US Power?,” International Journal of

Humanities and Social Science 5, no, 10 (October 2015): 189, Accessed on March 31, 2019,
http://www.ijhssnet.com/journals/Vol_5_No_10_1_October_2015/21.pdf
 role as the central player in the international system for decades is evidently
unparalleled.

Despite the long-term dominance of the United States in global affairs, the
country has been facing a decline. America’s power has been eroding for some time.
It’s still the most powerful state, but countries such as China and Russia are challenging
America for global hegemony. Even other states are catching up and asserting their
independence in the international arena. Shifts in power could lead to a transition from
the current world order to a new one, as states like China contend their Eastern
ideologies to replace the Pax Americana.

China’s rise as the regional hegemon in East Asia is due to the strategic planning
that the Chinese government has started to boost its economy. China has created
multilateral organizations and developed a global lending program. Other countries in
the East such as Philippines and Australia improved their bilateral relations with China,
with others following suit. China’s play in tactical diplomacy could help it win most of the
states’ trust in the region. It is even spreading its influence in Africa and Latin America.

The United States can’t slow down China’s rise nor contain its power. Some
experts argue that China will be a huge challenge to the United States, while others
believe that America will remain as the number one superpower. A challenge for global
hegemony could end up in conflict, particularly war. Realism’s emphasis on the theory
of power transition suggests the idea that the inevitability of war between two opposing
states could end up changing the world order and the political economy of the
international system.

China’s military strength may pose a big threat to the United States, as China
makes use of its multilateral relations to accumulate wealth and resources to improve its
defense and weaponry. It is too early to say that China will eventually replace the United
States, as the Trump administration takes preventive and preemptive measures in
advancing its relations with President Xi Jinping. It is certain however, that the power
shift between the United States and China will have lasting effects on the international
political economy of the current world order, as well as the future of the Sino-American
relations.

II. A. Statement of the Problem

The study aims to analyze the political economy structure behind the power shift
paradigm involving USA and China.
Specifically, the study seeks to answer the following:

1. How does China compare to USA in terms of hard power and soft power?
2. How does the power shift paradigm affect the relationship between USA and
China?
3. How does the power shift paradigm affect the political economy of the liberal
world order?
 B. Methodology

The study will use Qualitative Research Design to answer the research
problems. Data will be gathered from journals, documentaries, and other scholarly
articles related to the problem. The study will use comparative analysis to draw relative
differences of national power between USA and China during the Obama and Trump
administrations and the Xi Jinping administration. National power during Obama’s,
Trump’s and Xi Jinping’s administrations are examined and analyzed for contemporary
reasons. Metrics identified outside the given time frame will not be included to produce
more coherent results.

National Power

Some authors feel it is sufficient to determine national power by examining the

economic and military strength of a country. Others use political, military, and economic
metrics together to measure state power. This study will use political, economic,
military, demographic, cultural and educational variables to incorporate multiple
perspectives on a complex concept of power. Observing an approximate distribution of
power will help estimate which state would be successful in a potential conflict.

Hard Power and Soft Power

This study makes use of Joseph Nye’s conceptualization of power by dividing it

to two categories- hard and soft power. Hard power includes metrics such as GDP,
population, military spending, and military manpower. Soft power, which is just as
important as hard power, will be used in the study to refer to influence of one’s state on
others. Educational metric of power such as world university ranking will be used to
determine the economic strength of a nation through its high-skilled workforce. The
study considers pop culture as a metric for cultural power. Cross-national analysis will
be used to compare the selected metrics between USA and China.

Sino-American Relationship and the International World Order

Literary and historical analysis will be used to critically determine the trend of the
rise of China’s national power and how the power transition affects the current
international system. Relevant journals and scholarly articles will be gathered and
analyzed to answer the problems from different perspectives. These perspectives will
be integrated to validate findings of the study.
III. Review of Related Literature

State Power

National power serves as a fundamental concept in international relations.

Theories on hegemonic stability and power transition among states are based on the
idea of a state having the power to act and influence upon the other actors of the
international system. Although there are many literatures based on the concept of
power, there is still no concrete definition to it. Scholars are having a hard time coming
up with a single definition to something so vital. In many studies, scholars suggest that
power is a prerequisite for global hegemony.

Tellis explains that the notion of state or national power is mostly grounded in
political realism. Political realism perceives the human nature’s permanent struggle for
security. This struggle opens doors for competition between individuals, groups, states
or other political entities in the quest for achieving resources for security. 3 In an
international level of analysis, this competition urges rivalling states to maximize their
capabilities of acquiring resources to meet their self-interests. This explains the long
history of wars and violence that constantly changed the world order due to national
interest. Tellis reiterates from older scholars that the conceptions of power are based on
resources and how they are utilized.

When discussing power, it is a tendency for scholars to assume that power of a

state heavily relies on its economic dominance over others. The United States proved
its economic strength through different sectors like financial markets, energy production
and military spending.

Despite a long history of discussions, arguments and literatures on the different

notions of power, theoretically and pragmatically, it is widely accepted that the concept
of power is something so complex that it ranges into a multitude of factors. These
factors could be political, economic, military, cultural and so much more. Proposed
instruments of power such as military and economic that make use of resources in a
state are evident in the dominance of the United States for decades.4 America’s
unrivaled military strength and fruitful economic ties with neighboring territories are a
testament to the state’s power and influence in global affairs.

Military as an instrument of power refers to the ability to deploy the means of

warfare against a target. It also consists of arms race, military manpower, air and naval
forces and other things related to military power. Having military strength enhances the

3 Ashley J. Tellis, “Assessing National Power in Asia,” Foundations of National Power in the Asia-Pacific
(2015): 4, Accessed on April 2, 2019,
https://www.nbr.org/wp-content/uploads/pdfs/publications/sa15_overview_telllis.pdf
4 Addison Daniel Huygens, “American decline and changing global hegemony,” Graduate Theses and

Dissertations (2017): 7, Accessed on April 2, 2019,

https://lib.dr.iastate.edu/cgi/viewcontent.cgi?article=7155&context=etd
capability of a state to threaten other states, as well as improve its national defense.
Realist theories and their view on security dilemma expounds on the idea of a state
improving its defenses and means of deploying warfare by spending on military
production. Other dimensions such as economy, culture and diplomacy are metrics of
power that involve social influences that drive the international system through trade
and peaceful relations with other states.

In Huygen’s study on national power, he explained that Organski’s determinants

of power are divided into natural and social. Natural determinants include geography,
natural resources and population. Social determinants, on the other hand, include
economic development, political development and national morale.5 Huygen asserts
that a state’s power is based on both natural and social determinants, as natural
resources need the state’s social capabilities to fully utilize these resources.

Huygen also discussed Joseph Nye’s own conceptualization of power. Nye

divides power into two categories, namely hard power and soft power. Hard power
consists of economic and military capabilities. Soft power refers to intangible elements
of national power such as education and pop culture. Hard power’s coercive nature and
soft power’s co-optive nature are both essential and equally important in achieving high
national power.6 This combination requires strategic planning so the state can meet its
goal in being a global hegemon.

Hegemony

In the context of international relations, hegemony has been commonly tied to

power and the hierarchy of power in global affairs. Like power, the concept of
hegemony is contested by scholars and needs clarification to fully integrate it to
contemporary global politics. Hegemony is relevant in the field of international relations
because it explains the dynamic characterization of the global power of the state. 7
Historically, hegemon was a term used to define “leadership” or “sovereign ruler.” Since
then, the definition expanded to include the dominance of a state over another in
politics, economy and military.

According to Italian Marxist philosopher Antonio Gramsci, hegemony is created

when the worldview of the ruling class eventually forms as the norm of culture in
society. It occurs when the ruling class successfully anchors its understanding of society
into the whole society, setting up a new form of the status quo8. In an international level
of context, this can be viewed as the most powerful state in the global community
enforcing its ideology as the main or collective ideology around the world. Currently, the

5 Huygens, “American decline,” 10

6 Ibid., 11-12
7 Andrew F. Herrmann, “Hegemony,” The International Encyclopedia of Organizational Communication

(February 2017): 1, Accessed on April 3, 2019, doi: 10.1002/9781118955567

8 Ibid., 1
hegemon that is United States influenced most of the states in the world with its
American ideology of liberalism and free trade economy.

Aside from the Marxist perspective on hegemon, discussions from the neorealist
school of international relations view hegemonic stability theory as a paradigm of the
relationship between hegemonic power and the global system. This theory is commonly
attributed to Charles Kindleburger and is used to explain the existence of international
regimes and hegemonic wars between powerful states. According to neorealist theorists
on hegemonic stability theory, a hegemonic state is necessary for the creation of long-
standing international institutions.9 This hegemonic state serves as the foundation of
these institutions in which they decline when the state’s hegemonic power declines.
Critics argue that the fall of a hegemonic state doesn’t necessarily equate to a
disintegration of the world order, as international institutions and multiple cooperation
can continue to exist in keeping the international system stable.

Another influential contribution to the literature of hegemony is A.F.K. Organski’s

power transition theory which explores the impact of the distribution of power by actors
in the international system. According to Organski’s power transition theory, a state’s
power comes from internal development, and since development occurs at various
rates, the power of states rise and fall relative to each other. The second observation of
the theory states that the international order is shaped by the dominant nation, or in this
context, the hegemon.10 The phenomenon in which a rising power overtakes the
dominant power for global hegemony is called power transition. These power transitions
can either be peaceful or violent, depending on the satisfaction or dissatisfaction of a
rising power on the hegemon. In some instances, violent forms of power transition lead
to major conflict such as war. Intertwining hegemonic stability theory and power
transition theory is integral to neorealist takes on the concept of hegemon in which a
dominant state that shapes the world order will relatively face a rising power that wants
to change said order.

Reviewing past examples of states that achieved hegemonic powers is a

common method in studying the concept of hegemony. Some of the dominant states
prior to the 21st century are Ur, Athens, Corinth, Portugal, Britain and the United States.
However, debates have sprung up on which past states should be considered as global
hegemonic powers or ruling empires. It was argued that only three states could be
considered hegemons since the rise of the modern-world system; the Dutch Republic in
the 17th century, the United Kingdom in the 18th century and finally the United States in
the mid-20th century.11 These dominant states ruled for certain periods of time and
shifted the world order one after the other. The United States overtaking Britain for
global hegemony was done peacefully. It shifted the world order from Pax Britannica to
Pax America.

9 Huygens, “American decline,” 15-16.

10 Ibid., 21
11 Ibid., 26
U.S. Hegemony

When the Second World War ended, the United States was seen as the most
powerful actor in the international system due to its overwhelming military and economic
dominance. At the end of the war, the industrialized nations of Europe saw a decline.
The tragedy of war brought industries and economies of the great powers of Europe to
ruin. The Soviet Union and the nations from Eastern Europe faced similar destruction
which resulted to millions of casualties.12 It would take years and billions of dollars for
Europe to repair the damages it received.

The United Kingdom economic power in the world since the 19th century was
replaced by the United States in the 20th century. Not only did the United States
enforce its views on global economy, it was also able to influence other states with its
political policies due to its sheer power. The United States designed the new world
order based on the nation’s perspective on democracy and liberalism. In the Bretton
Wood Agreements, international financial institutions were established and superpowers
expanded their sphere of influence in the community through military alliances. 13 Under
the leadership of the United States, common economic interests united Japan and
Western Europe. At the end of the Cold War, the Soviet Union ceased to exist thus
leaving the United States as the only superpower.

“Pax Americana” is most commonly used to describe the American dominance

after 1945, mainly in the Western hemisphere, and the peace and stability it brought to
some, but not all, states that were covered by the United States sphere of influence
during the Cold War. The United States incorporated its huge military and economic
power into creating security and economic institutions that helped stabilize the
international world order: the United Nations, the North Atlantic Treaty Organization, the
World Bank, the International Monetary Fund and the World Trade Organization. The
new international order was also influenced by America’s “soft power” which pertains to
its ideological and cultural appeal.14 Since 1945, the United States has projected its
values on liberalism by promoting democracy and human rights.

Hegemonic stability theory explains why Pax Americana was created, why it has
endured political and economic struggle since 1945, and why it faces an unclear
future.15 Hegemonic stability theory states that a liberal international order requires a
hegemonic power to manage and stabilize the international political and economic
systems. United States as the global hegemon provided public goods in the realms of
both economics and security and acted as the supervisor in the international system
where, as realist studies would put it, global anarchy exists.

12 Huygens, “American decline,” 27

13 Christopher Layne, “The US-Chinese power shift and the end of the Pax Americana” International
Affairs 94, no. 1 (2018): 92, Accessed 4, 2019,
https://www.chathamhouse.org/sites/default/files/images/ia/INTA94_1_6_249_Layne.pdf
14 Ibid., 90
15 Ibid., 92
 Despite its decades of dominance in global affairs, U.S. hegemony has been
facing a decline. Even though the United States displays military and economic
supremacy, it is struggling with weakness due to low economic growth and the gradual
decline of the industry- particularly in the field of innovative technological products.16
The United States has been losing momentum, leading to a decline in economic force
and appeal. Not only does it face a decline in military and economic power, it also
suffers from losing its grip on “soft power” by not being able to create and stabilize
diplomatic networks. The concept of soft power was used in the American foreign policy
of the Obama administration. The nation’s ability to provide public goods in the global
community through “hard power” and “soft power” has diminished. As United States
suffer from loss of cohesive power, other countries rise to challenge the liberal world
order. A combination of slow economic recovery, a resurgent Russia, and an
increasingly confident China is slowly proving the claim by theorists that global
hegemony is transitioning into a new world order, away from the American-centric order,
and that distribution of power is shifting between the hegemon and its challengers.

Rise of China

A challenger to a global hegemon is not just an actor that increases its

capabilities of using power. Power shifts constantly through time as economic
relationships and global tensions between states change too.17 A fundamental shift
towards a multipolar world has been taking place, and an overwhelming multilateral
power surge is moving towards Asia. Emerging powers in the East such as China, India
and Brazil are becoming new center points for global influence. The average growth of
the GNP of most emerging powers is significantly higher than that of the European
Union or the United States, with China and India growing at an average of 10% for the
last 30 years.18 It is apparent that these states are increasing their power in terms of
economy, and once they have public goods in their disposal, they can easily influence
the other actors of the international community into following their economic policies.
The main contender to the American hegemony and Western world order is China due
to its alarming growth in economic and military power.

Napoleon once said that China is a sleeping lion and when she wakes up she will
shake the world to its core. People’s Republic of China is the most populous country in
the world with vast geographical features. After the Communist state was formed in
1949, China experienced military and economic growth. 19 With China’s economic
reforms which resulted less control of state over economy, China was able to secure a
stable economy matched with its huge population and military power. China has
increased its foreign investment and trade and expanded its partnership by engaging in

16 Robert Kappel, “Global Power Shifts and Challenges for the Global Order” (June 2015): 4, Accessed on
April 4, 2019,
https://www.researchgate.net/publication/279287367_Global_Power_Shifts_and_Challenges_for_the_Glo
bal_Order
17 Huygens, “American decline,” 19
18 Kappel, “Global power shifts,” 6
19 Khan, “Is growing China a real challenge,” 192
regional economic integration by launching programs such as the New Silk Road
infrastructure program, Asian Infrastructure Bank, and more.20 China’s integration into
globalization further increased its growth in economy. According to the World Bank
report for the last three decades the economy of China grew at an annual average rate
of 10%.

Chinese President Xi Jinping proposed an economic reform agenda during the

2013 Third Plenum of the Chinese Communist Party to address any of China’s
problems in regards to its economy.21 Today, China is the second largest economy of
the world after the United States. These reforms range from a revised tax system, to
financial liberalization, to partial reform of restrictions on imports and inbound foreign
investment. There is a possibility that in the next decade China will overtake the United
States by having the world’s biggest economy. China has built up military forces with its
significant capabilities and its defense budget is the second in the world after the United
States. China has also signed strategic partnerships with Russia, Japan, India and the
European Union. The inevitability of China seeking regional hegemony in the East
incurs fear due to its unprecedented economic and military strength that it might use to
force its agenda of instilling a new status quo in the region, and then finally challenging
the Western hegemony, implying that a conflict between Chinese and American power
will happen eventually.

Sino-American Game Theory

The military power of the United States is considered by US policy makers and
security studies scholars to be the geopolitical trump card that will keep America at the
top of the global power hierarchy even if China catches up and overtakes it in terms of
economy and technology. However, recent studies of the Sino-American military
balance state that it won’t take long for China to close the military gap with the United
States. The US hegemon considers three regions as vital to its security and prosperity
to project military dominance. China, on the other hand aims at dominating its
geographic backyard, seeking regional hegemony in East and South-East Asia.22 These
regions have become focal points of Sino-American geopolitical competition, and it
shows that China’s military presence is posing a threat against America’s regional
military power in Asia.

Strategies must be devised by both nations to come up with better ways in

achieving their own goals. This method is best described by Game Theory, an analysis

20 Jasmin Sapungan, “The Political Economy of the New World Order: Paradigm Shift from Western
Hegemony to Multipolarity,” (2018): 2, Accessed on April 5, 2019,
https://www.academia.edu/36245961/THE_POLITICAL_ECONOMY_OF_THE_NEW_WORLD_ORDER_
PARADIGM_SHIFT_FROM_WESTERN_HEGEMONY_TO_MULTI-POLARITY
21 US-China Economic and Security Review Commission, “USSC 2018 Annual Report,” (November

2018): 29,
https://www.uscc.gov/sites/default/files/annual_reports/2018%20Annual%20Report%20to%20Congress.p
df
22 Layne, “US-Chinese power shift,” 94-95
of how decision makers interact in the decision making process and how these actors
carefully make their moves by taking into account how the other will react to their
decisions. Scholars believe that international conflict and other phenomena in
international relations occur as a result of decisions made by international actors,
especially leaders of states.23 This theory explains the decisions taken by both the
United States and China in global affairs during the Trump and Xi Jinping
administrations.

Tensions between China and the United States rose ever since President Trump
chose China as a convenient target during his presidential campaign. Trump accused
China’s economic policies, and Americans fear that China’s increasing economic
strength might hurt the nation’s international stature.24 On 2018, Trump imposed tariffs
accounting to more than $250 billion on Chinese imports. Xi Jinping retaliated by
applying tariffs of $110 billion on US imports.25 This could trigger a trade war which
would greatly affect the economy of both sides.

US-China tensions are reaching extraordinary heights, but the main geopolitical
competition isn’t based on trade or economic differences only. China’s gradual increase
in power in military, economy and diplomacy could help it in influencing its regional
backyard, achieving hegemony in Asia, and finally acquiring enough power to challenge
the United States in all dimensions. China’s true intentions might be unknown, but its
rise to power could finally surpass the United States which has been facing decline in
recent years. This power shift could have major implications on the political economy of
the international actors and the liberal world order established by America.

IV. Presentation, Interpretation, and Analysis

Political Power

The United States is a capitalist country with federation and constitution

democracy. It is a permanent member of the United Nations Security Council. As the
current global hegemon, it has strong international political and institution influence. Its
allies are Japan and Europe. China, on the other hand, is a communist nation with a
central government. It is also a permanent member of the United Nations Security
Council. It promotes peace and development and by maintaining good relationships with
a lot of countries.26

23 Stephen L. Quackenbush, “Game Theory and Interstate Conflict,” (June 2014): 1, Accessed on April 5,
2019, doi: https://dx.doi.org/10.1093/obo/9780199743292-0071
24 Yukon Huang, PhD, “ US-China Tensions: Interplay Between Economics and Politics,” Washington

Journal of Modern China, (2017): 31, Accessed on April 5, 2019,

https://carnegieendowment.org/files/WJMC_Autumn_2017_Huang.pdf
25 Dorcas Wong, “The US-China Trade War: A Timeline,” China Briefing, February 25, 2019, Accessed on

April 5, 2019,
https://www.china-briefing.com/news/the-us-china-trade-war-a-timeline/
26 Khan, “Is growing China a real challenge,” 193
 Based on their political ideologies, both countries have different views of
freedom, economic control and structure. China views that the United States has put
great effort in transforming other countries according to its own value system over the
past several decades. The United States greatly helped China in the 1980s in its
integration into the international community. It can be seen that America enforces its
national and foreign policies in other states by using its hegemonic power. It has
deliberately tried to intervene in humanitarian affairs in other states. China is very
prudent in dealing with American affairs. In 2013, when President Xi Jinping and
President Barack Obama met at the Sunnylands estate and jointly proposed “a new
model of major power relations”.27 This concept is a symbol of mutual respect between
the two nations in striving for global cooperation.

However, the US-China relations took a nosedive these past few years since
President Trump took office. The spark of the trade war deteriorated bilateral relations,
dividing both nations into creating strategic plans as a hegemon and as a challenger.
China insists on its plans of peaceful development and diplomatic cooperation with
other states, but the United States considers this as a threat, implying that China’s rise
to regional hegemony will soon overtake American dominance.28 China has taken a
peaceful way of seeking power, in contrast with the United States’ history of coercive
establishment of Western political views.

Economic Power

Figure 1. GDP (PPP) per capita. Data source: World Bank.

27 Ni Feng, “Political Factors Shaping Sino-Us Relations,” China-US Relations: Exploring a New Pathway
to A Win-Win Partnership, (July 2017): 54, Accessed on April 5, 2019,
https://csis-prod.s3.amazonaws.com/s3fs-
public/publication/170705_Chinese_Side_Report_Exploring_EN.pdf
28 He Yafei, “US-China Relations: From Cooperating Rivals to Competing Rivals,” The Diplomat,

(August 30, 2018), Accessed on April 5, 2019,

https://thediplomat.com/2018/08/us-china-relations-from-cooperating-rivals-to-competing-rivals/
 China is the world’s fastest growing economy, world’s largest manufacturer and
exporter and second largest importer. As a communist country, it has cheap labor force,
and it possesses huge mineral and agricultural resources. The United States has a
capitalist free market with dollar as the dominant international currency. It has great
influence over international institutions due to its sheer economic strength. In Figure 1, it
can be viewed that China has a staggering increase in GDP, despite it suffering some
risks to its economic growth due to its debt, especially corporate debt.29 The United
States is still the largest economy in the world, but predictions made by Fortune
magazine speculate that China will surpass the U.S. economy by 2030.30

Demographic Power

Figure 2. Population 2012-2017. Data source: World Bank.

The United States has little to no hope of competing with China in overall
population. Only India can compare with the enormous population of China. America
experiencing low population growth rate in 2016 and 2017 is mostly due to the current
administration’s proposals of changing its U.S. immigration policies. With almost 1.4
billion as of 2017, China is guaranteed to be advantageous against the United States in
this field.31

29 He Fan, “The Future of Economic Cooperation and Conflicts between China and the United States,”
China-US Relations: Exploring a New Pathway to A Win-Win Partnership, (July 2017): 17, Accessed on
April 5, 2019,
https://csis-prod.s3.amazonaws.com/s3fs-
public/publication/170705_Chinese_Side_Report_Exploring_EN.pdf
30
Geoff Colvin, “Study: China will Overtake the U.S. as World’s Largest Economy Before 2030,” Fortune.
(February 9, 2017), Accessed on April 5, 2019
http://fortune.com/2017/02/09/study-china-will-overtake-the-u-s-as-worlds-largest-economy-before-
2030/
31 World Bank Database, Population, total, Accessed on April 5, 2019,

https://data.worldbank.org/indicator/SP.POP.TOTL?locations=US-CN
Military Power

Figure 3. Military Spending 201 2-2017. Data Source: Stockholm International Peace
Research Institute.

China’s increase in military spending is due to it applying modern modifications in

its military capabilities. Still, it would take a lot of time for China to catch up to the
America. The United States has the strongest and most powerful army in the world, and
has the highest military expenditure, spending on military essentials such as nuclear
weapons, drones, long range missiles and aircrafts. The overwhelming advantage in
numbers doesn’t necessarily equate to a victory in armed conflict. Although, it can be
assumed that China’s main military asset is its personnel due to its enormous
population. Even though it is trailing behind the United States in military expenditure, it
has a population advantage that it can use in case of a major conflict such as a
hegemonic war.

Educational Power

According to Time Higher Education’s World University Rankings 2019, the

United States has 24 academic institutions on the top 50, compared to China’s number
of 2.32 The United States has the highest expenditure in education, with China at
second place. America has great innovations of science, technology, space, medicine,
engineering and computer. Although China has the highest number of tertiary school
graduates due to its huge population, it still needs to catch up with USA in creating more
effective academic institutions and policies.

32 World University Rankings 2019, Accessed on April 5, 2019,

https://www.timeshighereducation.com/world-university-rankings/2019/world-
ranking#!/page/0/length/25/sort_by/rank/sort_order/asc/cols/stats
Cultural Power

The United States has the most powerful film industry in the world- Hollywood.
Even though America has an overwhelming advantage in media and entertainment
industry, China has the potential to become an even bigger market due to its massive
population and their growing middle class.33 Despite China’s potential for cultural
dominance in the world, it needs a lot of years to establish its media and entertainment
market because the United States has an unprecedented cultural influence that has
been present for decades- social media, internet, Hollywood films, games, sports and
much more.

Power Shift and Sino-American Relations

China’s development through political and economic reforms has contributed

substantially to overall global growth, most notably during recessions like the 2008–
2010 downturn when the U.S. economy was experiencing a decline. China has become
more integrated to the international community, opening itself to more international laws
and norms and practicing diplomatic relations with other countries.34 Its peaceful means
of global cooperation is relatively different to America’s current foreign policies.
President Trump’s “Make America Great Again” slogan is slowly evolving into a political
agenda that will alienate the United States from the international institutions that it
helped create.

The global domination of the United States in manufacturing, energy

consumption and exports has been taken away by China. In Khan’s study of China and
U.S. power relationships, he stated that the power gap between USA and China is
rapidly shrinking. The USA National Intelligence Council reports that Asia will surpass
the United States and Europe in terms of global power based on several metrics and
that China will become the largest economy of the world.35

In Huygen’s study of global hegemony, the United States is facing a relative

decline in national power, and that China will most likely be the challenger that will
eventually replace America as the current hegemonic power.36 The shift in global power
could affect the current relationship between USA and China. As China manages to
increase its power in peaceful means, President Trump’s aggressive statements are
changing the policies it once established in global affairs. The Sino-American
relationship that was built by a strong foundation in the past is now spiraling downward.

33 Huygens, “American decline,” 80-81

34 Michael D. Swaine, “A Relationship Under Extreme Duress: US-China Relations at a Crossroads,”
Carneige Endowment for International Peace, (January 16, 2019), Accessed on April 5, 2019,
https://carnegieendowment.org/2019/01/16/relationship-under-extreme-duress-u.s.-china-relations-at-
crossroads-pub-78159
35 Khan, “Is growing China a real challenge,” 193
36 Huygen, “American decline,” 87
International World Order

According Freedom House’s most recent publication entitled, “Freedom in the

World 2019”, the world has experienced a 13th consecutive year of decline in global
freedom. This shift spanned in many countries around the world, from democracies like
the United States to authoritarian regimes like China and Russia.37

Figure 4. Freedom House measurements of declines in democracy.

A lot of nations are moving away from democracy. The crisis is linked to a
changing balance of power in a global level. Power in industrialized countries such as
the United States is slowly dissolving as China, India and other countries’ economies
are rising. China’s GDP per capita increasing 16 times from 1990 to 2017 is a testament
to China’s growth and gradual rise to being a worthy challenger to the US hegemony.

China is now exporting its model of comprehensive internet censorship and

surveillance around the world, promoting artificial intelligence and facial recognition
technology. China’s desire and capability to spread totalitarian models of digital-driven
social control pose a threat against democracy worldwide. The threat to global freedom
requires the United States to strengthen its alliances with other democratic states and
deeply commit to its liberal values. However, as America’s power is declining during the
recent years, and China’s rise to political and economic power is slowly influencing
global affairs, Pax Americana will eventually deteriorate and will be replaced by Eastern
ideologies.

37 Freedom House, “Freedom in the World 2019” (2019): 5, Accessed on April 5, 2019,
https://freedomhouse.org/sites/default/files/Feb2019_FH_FITW_2019_Report_ForWeb-compressed.pdf
V. Summary, Conclusion, and Recommendation

Summary

The United States of America emerged as the hegemonic power after the events
of World War II and acted as the central actor in maintaining international order.
However in recent years it has faced decline, and China is gradually increasing its
power to challenge the global hegemon. The power shift between USA and China could
have lasting implications on their relationship and on the political economy of the global
economy, as imbalance of power could potentially trigger conflict such as war for
hegemony.

Conclusion

After gathering, interpreting and analyzing the collected data, the researcher
concluded the study with the following statements:

1. Compared to the United States, China is closing the gap in national power. Due
to its enormous population and rapid growth in economy, it will overtake the
United States in the next decade or so. However, the United States is still
unmatched in political, economic, military and cultural power. Despite its
unprecedented economic development, China has a long way to go and the
United States will remain as the global hegemon in the future.
2. The power shift between USA and China is straining the relationship of both
nations. As the dramatic increase in power of China poses a threat to American
hegemony, conflict between nations could result to major conflict such as
hegemonic war. However, mutual cooperation can still be achieved and the
bilateral relations can be strengthened by President Trump and President Xi
Jinping despite differences in their national policies.
3. The power shift between USA and China has a huge impact on the political
economy of the world. Economic and political institutions set by Western
ideologies are changing as core values of liberal democracy in many countries
are shifting to nationalist principles fueled by powerful authoritarian regimes like
China. The United States’ unwillingness and inability to maintain the principle
values of the liberal world order will result to the decline of Pax Americana.

Recommendation

Based on the conclusion of the study, the researcher recommended the

following:

1. Conduct more studies on the power shift between USA and China by including
other metrics of indicating national power such as technology and geography.
2. Apply more theories on international relations and collect more data on power
shift paradigm to produce more results and validate findings of the study.
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