It is true China has achieved decades of breathtaking growth. It now ranks at or near the top in terms of foreign-exchange holdings, trade volume, and inflows of foreign direct investment. But even at number four, China accounts for only 6 percent of the global economy, equal to about two Californias. On a per capita basis, China sinks further. It is 49th in foreign-exchange reserves per person. It is 92nd in exports plus imports per person, and 106th in GDP per person. Lacking a reserve currency, like the US dollar, China cannot set the parameters for commodity prices, inflation, interest rates, or stock prices around the world. Nor can it call the shots in the World Bank or International Monetary Fund.
Indeed, given its size, China’s most important contribution to the rest of the world now and into the future will be to take care of itself. Its ability to satisfy most of its own needs—in energy, grain, and cotton—is crucial to world price stability. The gradual growth of its economy helps the rest of the world remain stable. Economic growth helps keep China politically at peace, avoiding a breakdown that could saddle the rest of the world with refugees, public health problems, and transborder crime problems spilling out of China into neighboring countries. In a sense, then, big as it is, China remains a supporting player on the global economic stage.
China’s ascension could be derailed by domestic instability or global economic shocks, but assuming that it does become number one, what will it mean for China’s place in the world?