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It's no secret that China is on the fast track to global domination. But even the most bullish observers were taken aback when Arvind Subramanian announced that, measured properly, China's GDP surpassed that of the US back in 2010, more than a decade ahead of Goldman Sachs' latest forecast. In his book Eclipse: Living in the Shadow of China's Economic Dominance, the Oxford-trained senior fellow at the Peterson Institute proposes an index of power that weighs GDP, trade, loans, and debts. Conclusion: China will steer the world financial system by 2020—and there's nothing anyone can do about it. Eclipse has catapulted Subramanian onto Foreign Policy's list of top global thinkers and led to briefings with authorities from Washington to Delhi. World leaders, he says, urgently need to draw China into multilateral commitments—while they still can.
WIRED: Your prediction that China will soon eclipse the US shocked even some China boosters. After all, the meteoric economic growth can't be sustained forever.
Arvind Subramanian: China will slow down considerably. But even conservative growth forecasts translate into a lot of power. I see China's renminbi replacing the dollar as a global reserve currency in 10 to 15 years. Even the boosters find that difficult to swallow.
WIRED: You focus on the hard power of economics, but surely other factors—so-called soft power—figure into a country's influence?
Subramanian: Of course. The US has both economic and soft power. Its influence stems in part from its openness, democracy, and technological leadership, not to mention the world's best universities. But China doesn't need those things to maintain its competitive advantage. Wages there are still much lower than in the West, so China will continue to attract investment.
WIRED: How will China's ascendancy differ from that of the US?
Subramanian: When the US and UK were superpowers, they were among the world's richest countries. China will be economically dominant when its standard of living is only 40 to 50 percent that of the US, and it'll be some time before it can exercise the kind of soft power that the US benefited from. But in terms of the hard currency of power—the ability to use economic sticks and carrots to get what it wants—China will exercise that power as much as the US has been able to.
WIRED: You wrote an op-ed for The New York Times advocating that Europe look to China for a bailout. Wouldn't that work against Western interests?
Subramanian: There's a paradox in my prescription: Here's a rising power; give it more power. China needs to grow rapidly for the regime to remain legitimate. The answer is not containment, not even engagement, but strategic empowerment of an already rising power. If China provided emergency funds to Europe, we would need to give it more say in the IMF; that's a fair quid pro quo. At the same time, China's stake would rise, because it wouldn't want the money to be squandered. The strategy is to bring them in, then tie them down so their interests are aligned with those of the multilateral system.
WIRED: You call China a "precocious superpower," unique in the history of global economics.
Subramanian: China was a top dog economically for thousands of years prior to the Ming Dynasty. In some ways, the past few hundred years have been an aberration. If you believe the knowledge of how to achieve and maintain dominance is embedded in the Chinese consciousness, well, that doesn't go away.
