PROVIDENCE Niall Ferguson Exaggerates America’s Weakness and China’s Strength By Shay Khatiri on August 26, 2024

PROVIDENCE

Niall Ferguson Exaggerates America’s Weakness and China’s Strength

By Shay Khatiri on August 26, 2024

In his debut column for The Free Press, Niall Ferguson highlights some of the challenges currently facing the United States. Particularly for conservatives, his criticisms are painfully familiar: aging leadership, an ever-expanding state, a weakened military, an out-of-touch elite, and mounting debt. However, Ferguson’s provocative thesis—“Are we the baddies?”—immediately nullifies these criticisms.

Ferguson’s column would have been uncontroversial, if somewhat dull, had he not framed it within the context of the U.S.–China rivalry. In his pursuit of provocation, he undermines his objective. Ferguson writes:

But it only recently struck me that in this new Cold War, we—and not the Chinese—might be the Soviets. It’s a bit like that moment when the British comedians David Mitchell and Robert Webb, playing Waffen-SS officers toward the end of World War II, ask the immortal question: “Are we the baddies?”

Jonah Goldberg has argued that this criticism fails on domestic and moral grounds, and there is little to add. Outside the far left and far right, most sane Americans would agree that the American regime and the international order it upholds are morally good, at least compared to the alternatives of China, Russia, and Iran.

But beyond the moral argument, Ferguson further errs in comparing the United States with China in amoral terms. For all America’s problems, China is far weaker and less capable of winning a protracted conflict.

In March 2019, two different papers—one by Derek Scissors, a China economist at the American Enterprise Institute, and another by four economists for the Brookings Institution—argued that China has been exaggerating its economic numbers and GDP by up to 30 percent. More recently, Scissors informed the House Committee on Foreign Affairs that “The GDP gap between the U.S. and PRC was well over $7 trillion in 2022, versus $8 trillion in 2012.” China has continued to exaggerate its numbers at similar levels since. Its actual, nominal GDP could be as low as $12 trillion. In 2023, its aggregate local and central government debt was $12.5 trillion.

In comparison, the United States ended 2023 with $33 trillion in general public debt and a $27 trillion GDP. While both countries face debt problems, the magnitudes are similar as a percentage of GDP.

The economic infrastructures of the two countries are vastly different. The U.S. economy is built on free markets. Although imprudent government intervention has often slowed the American economy’s growth, these obstructions could theoretically be easily removed. China, in contrast, faces a different and much more intractable set of economic problems. Dan Blumenthal succinctly explained China’s growth model to me: “China builds a building, which increases GDP, knocks it down, which increases GDP again, and then builds it back to add to its GDP numbers.” U.S. growth is self-sustaining, while China’s recent economic struggles preview what is to come due to its lack of an economic base to sustain growth.

The wealth disparity between the two countries is vast, which is important as national wealth is the key source of purchasing power, not GDP. Chinese household wealth is $84 trillion. U.S. household wealth is $140 trillion, two-thirds larger. This disparity is growing, having gone from $50 trillion in 2012 to $55 trillion in 2022.

Ferguson addresses other problems as well.

Joe Biden and Donald Trump are old, but so is Xi Jinping. However, since he published his column, the Democratic Party forced Biden to quit the race, precisely because his age was an electoral vulnerability. This is nearly inconceivable in China. Furthermore, even if septuagenarian Trump wins in November, he will not lead America in five years, while Xi will likely remain in power in 2029.

The American elite is filled with bad, out of touch ideas, Ferguson charges. And yet, the Chinese elite is communist and corrupt—and communism is worse than whatever the American elite believes in. And American society can and is resisting these bad ideas, whereas the Chinese people must succumb to communism.

Both the U.S. and China have entitlement problems due to demographics. The U.S. mitigates this with immigration, whereas China is no immigrant’s first choice as a destination. American life expectancy has declined, but China’s population is shrinking. Americans have unhealthy lifestyles and diets, yet Americans’ poor standards are the envy of many Chinese. Americans may not be as religious or produce as many children as before, but the Chinese state is cracking down on religion and dealing with the disastrous consequences of its One Child Policy.

Ferguson’s warning is not that the U.S. will turn into the Soviet Union of the 1980s, but that it will become what China is now. These criticisms are valid in a vacuum, not in comparison with China. Given the options, any sane and honest person would prefer America’s position over China’s.

Ferguson’s invocation of the hollowed-out military is also misguided. He writes, “We have a military that is simultaneously expensive and unequal to the tasks it confronts,” without clearly defining those tasks.

While Taiwan is the most immediate concern regarding China, it is not the full picture. It is more accurate to say that the U.S. military is not well-positioned to deter a war with China, but it would be wrong to claim it cannot win one.

Washington has been feckless in ignoring the U.S. military’s shortcomings and the Chinese buildup. Without correcting the course, the gap between the two militaries may soon become uncomfortably narrow. However, assuming the Chinese military is as powerful as advertised has its own risks. The failures of Russia’s and Iran’s conventional capabilities against Ukraine and Israel, respectively, should give us pause, as should the endemic corruption in the People’s Liberation Army’s senior ranks, leading to frequent firings and disappearances.

Even assuming China doesn’t exaggerate its military strength as with its economy, there is no reason to accept defeat prematurely. Should the United States decide that it must win a war with China, our vibrant economy, technological edge, and wealth will prolong the war while transitioning to a wartime economy to produce unprecedented capabilities.

The U.S. alliance system is another strength. Forward positioning allows the U.S. military to threaten the Chinese homeland in a way China cannot reciprocate. It will also be able to disrupt Chinese maritime trade and deteriorate China’s war chest by relying on its forward deployment and allies. China can do no such thing. Our allies’ military and economic contributions are also important. Lastly, America has richer, more innovative, and more reliable allies than China, whose friends are limited to Russia, Iran, and North Korea.

Most importantly, the U.S. regime is legitimate at home. Despite objections to the current political establishment, few Americans wish to overthrow the republic. Certainly, there are more Chinese who oppose the Chinese Communist Party than Americans who wish to see the U.S. Constitution overthrown.

Ferguson is correct in pointing out America’s crises, arguably the worst since the 1960s. However, he flounders in seeking to convince his audience that America’s issues are worse than China’s. America, for all its problems, is still by far the richest and most powerful nation on Earth, but one with worrying trends.

These trends are concerning enough that they do not need exaggeration. Ferguson should continue to emphasize them. But by making an inappropriate comparison to the Soviet Union, and implicitly to China, he did not move the ball. Rather, he caused a distraction.