Opinion | Why the US and China are unlikely to trade places any time soon

Watching the US election campaign from China, there is a disorienting feeling of viewing an opposite and parallel world. In China, many economists fret that Chinese consumption is too weak. Chinese people are afraid to spend, and that leads to economic stagnation, maybe even deflation, as vendors with nothing left to cut dance on the margins of profitability.

On January 1, my gym in downtown Shanghai abruptly closed; I found another location, and that one closed, too, on January 12. Streets of closed storefronts downtown make it clear that business is not going very well, even as the polluted air implies that somebody somewhere is doing something.

Through this economic gloom, one voice has praised China’s model like no other. “America is falling behind, and China is rising as the world’s technological leader. Its policies are succeeding,” former US trade representative Robert Lighthizer wrote in his memoir. The book was published in June last year, a time when fears over China’s economy were raging.

Lighthizer argues that consumption, which is lacking in the Chinese economy today, isn’t the true measure of an economy’s worth, but that instead it is production. In that sense, China is still strong.

The US economy is largely driven by personal consumption, which accounts for about 68 per cent of gross domestic product. Manufacturing, by contrast, is around 11 per cent. That is one reason US President Joe Biden issued stimulus cheques in 2021, and why a generation ago president George W. Bush implored a shell-shocked country to go shopping after the September 11 attacks.

In a real way, the United States is the centre of global consumption, which gives US consumers great power. Whatever Americans want is often what the world gets, even though Americans have different ways of life than people in other countries.