In 1800, when the young American Republic was finding its feet and the Industrial Revolution was in its infancy, China dominated the world economy, producing nearly half of the planet’s manufactured output. But as European ships came calling with what seemed inferior wares, the Chinese Empire turned its back on trade, certain it would prosper best without these backward Westerners.
That turn inward sealed its fate. By the time of the first Opium War (1839-42), China was sinking into its “century of humiliation” just as a forward-looking America was beginning its ascent. A century later, China had been reduced to an impoverished agrarian economy. American domination had been firmly established.
But could history now be repeating itself, this time in reverse? Today, just as an ascendant China is spreading its global influence, the US seemingly repeats China’s ancient error. Is America setting itself up for a fall as spectacular as China’s back then?
China’s decline has few parallels in history. Although the global periphery fell backwards relative to the West in the 19th century, most European colonies saw their economies develop. But China suffered the ignominy of seeing its economy actually contract, until the Empire collapsed and the country suffered a decades-long civil war.
Imperial China’s isolationism had begun early: it scrapped what was then the world’s biggest navy around the turn of the 16th century. Although the Chinese governing class, having long shown interest in foreign technology, was not averse to learning from others, foreign observers frequently noted an air of superiority in official thought. As one 18th-century British observer noted, the Chinese tended to believe “everything is excellent and that proposals for improvement would be superfluous if not blameworthy”. Moreover, the regime wanted to monopolise the movement of trade and culture, bringing it into conflict with then-free trading and ravenous Westerners, while its examination system for entry to the bureaucracy tended to steer ambitious intellectuals towards mastery of the classics over the search for new ideas.
Above all, given the sheer size of China’s internal market — comprising nearly a third of humanity — the Chinese elite felt no pressing need for foreign trade and exchange, let alone overseas colonies. When the Empire dissolved its navy, one senior official noted that overseas exploration had “wasted tens of myriads of money and grain” in a search for “wonderful things” that however brought no material benefit to the state.
This ability to tune out the world set China apart from smaller European states that were engaged in an almost permanent arms race with one another. To expand economically, European countries and their colonial offshoots needed markets abroad. China didn’t. So it could afford to turn inward.
Yet while the Empire wanted only to limit rather than eliminate access of the outside world to China, its tendency to isolation blinded it to some of the implications of Western technological innovations — particularly naval, military and bureaucratic technologies. As a result it underestimated just how these were going to transform the world, with the result being that it fell irretrievably behind the technological frontier at a time Western countries were quickly pushing it forward.
It seems implausible that the US, as globally dominant today as China was then, could retrace such an arc of absolute decline. Nevertheless, Donald Trump is arguably repeating the same mistakes that China’s emperors once did, and for much the same reasons — a conviction of natural superiority, a sense the country can stand alone and thus dictate its terms of engagement with the outside world, and an underestimation of the transformative impacts of foreign technologies.
As China’s imperial rulers did, the US is presuming a false asymmetry between it and the rest of the world, having decided it needs the world less than the world needs it — its markets, its know-how, its protection and above all its dollar. This confidence, manifest in the administration’s declarations that it “holds all the cards”, has led it to launch a trade war on all its trading partners simultaneously, apparently in the expectation of rapid surrenders. The fact that hasn’t happened reveals the flawed reasoning behind “Liberation Day”, and we’re now into a period of standoffs and stand-downs which have left a vacuum in global governance.
“The US has decided it needs the world less than the world needs it.”
China is rushing to try to fill it. Beijing has begun pitching itself as the defender of the global trading system, Xi Jinping recently telling a gathering of global CEOs that “we must jointly maintain the multilateral trading system, jointly maintain the stability of the global industrial chain”. Although the US is turning inwards, the rest of the world is moving the other way, shoring up their ties in new trading blocs and agreements. China is taking advantage of this to raise food imports from Latin America and Africa, with Brazil quickly sliding in to replace American exports of soybeans.
Playing into Beijing’s hands is Trump’s tactic of accompanying tariffs with isolationist measures, such as withdrawing from multilateral institutions or shutting down USAID. While the President may feel that such measures free up resources and give him more tactical flexibility, they substantially relinquish the diplomatic battlefield to China. Dollar for dollar, China couldn’t match the previous US aid budget. But now the latter has dropped to zero, the bar is easily crossed.
Most significantly, Trump is apparently so convinced America has nothing to learn from anyone that he is overlooking how Chinese technology is already changing the world. Typical of this is his stance on “energy dominance”, the idea that the US should forgo the energy transition to exploit its abundant and cheap fossil-fuel ecosystem. Aside from doubts about the feasibility of this approach, what is inescapable is that in pursuing this policy, the US is forfeiting a rapidly emerging subsector to China.
No countries feel the need for a strong international order and an acceleration of the energy transition more than developing ones. This is where China has advanced furthest in recent years. Chinese FDI has been expanding aggressively in the developing world, whose share of total Chinese trade is consequently rising. In Africa, for instance, Chinese firms are creating power plants that then reduce electricity costs for, among other things, their mining operations.
Strategically, this advance into the soft underbelly of the world economy matters. While the world’s biggest markets are still in the developed world, the fastest-growing ones are in the developing world. Notwithstanding the claim of Trump’s energy secretary that “there is no climate crisis and we are not in the midst of an energy transition”, EV sales in developing countries are exploding, especially in some of the fastest-growing economies — up 70% last year in India, 200% in Malaysia, and over 300% in Thailand and Vietnam. So too is renewable energy, not only because it has become so inexpensive, but because it reduces the exposure of hitherto energy-importing countries to the vagaries of world markets, since no outsider can control their supply of renewable-energy inputs. Even petrostates like Saudi Arabia are moving aggressively towards decarbonisation, which is drawing them ever further out of the American and into the Chinese orbit.
When a state finds itself the centre of the world, as China once did and the US has more recently, it’s tempting for it to see its place as natural and eternal. But such hubris often amounts to pride before the fall. The relative decline of the American-led empire has been underway for some time, but Trump’s erratic and idiosyncratic policymaking may usher in a period of absolute decline, starting with a recession.
Given its democratic system, America’s governing class will probably respond and change course more quickly than the Chinese imperial elite did, making a full century of humiliation unlikely. Still, by the time the US does change course, China may have moved closer to its long-standing goal of retaking its place at the centre of the world. That alone will feel to America like humiliation.
