Opinion | The rise of China and the retreat of the US: a new global empire takes shape

In the first instalment of a two-part commentary prepared for next week’s Boao Forum, John Keane, Professor of Politics at the University of Sydney, offers an unorthodox interpretation on the global turmoil triggered by the Trump administration. Maga, he argues, isn’t a push to restore America’s global dominance, but rather a sign of an empire in retreat, now confronted by a resurgent China – its most significant economic, diplomatic and geopolitical threat since the late 18th century. Read part two here.

There is an old Chinese saying: when the winds of change blow some people build walls while others build windmills. This proverb has a fresh pertinence for our world is living through stormy times marked by a strange subdivision – the emergence of a powerful new Chinese empire of a kind unknown in previous world history and the walled withdrawal and retreat of the global empire of the United States.

Getting the measure of these world-shaping dynamics should be a priority for every thinking person, but the task is hampered by much bluff and bluster, propaganda and disinformation and – strangely – by widespread support for the view that US President Donald Trump’s preachings on America’s renewal and greatness are basically correct. It’s true that both the supporters and observers of Trump’s vision of America’s embattled global role are predicting a rough ride for the world. But even when they are doubtful or outright hostile to the new president’s mutterings, including his bizarre executive order against “windmills”, they tacitly or explicitly indulge his conviction that the US, despite its recent decline, is still the dominant global power and will remain so indefinitely, thanks to the gutsy leadership of the new Trump administration. Presented as breaking news for audiences hungry to make sense of a moment of great drama, Trump’s recent victory is interpreted as he would like it to be understood, as the triumph of the zeal to fix American decline, as the beginning (as he crowed at his 2025 inauguration) of a splendorous new “golden age” in which the US, standing on the verge of the “four greatest years in American history”, proves that it’s the “most powerful, most respected” country on our planet.

One trouble with this way of thinking is its blindness to the ways the US squandered its global supremacy and bankrolled the rise of its principal rival during the past four decades. American decline is not recent. Never mind the latter-day pandering to Vladimir Putin’s Russia. Think of the disastrous military interventions, the wars lost, the botched Blinken-style diplomacy and lies told, the cynical violations of the so-called “rules-based order”, and the derision and laughter nowadays generated by a “backsliding” US-style liberal democracy. Then think of the huge historical irony: the way the diplomatic recognition of the People’s Republic of China and the subsequent material contributions of the US to its sweeping reforms co-produced the return of China, after two centuries of subjugation, to a position of global prominence. The consequence? Thanks to the US, technically speaking, China is no longer merely a “country” or a “big power”. It is an empire on the rise. If by empire we mean a supersized polity whose economic, governmental, diplomatic, cultural and military power spills over and spreads far beyond its borders, then the undeniable fact, as I explain at length in China’s Galaxy Empire (2024), is that China is rapidly becoming an empire with a global reach. Not only is this fledgling empire a formidable challenge to American global hegemony and a far more robust and determined rival to the American empire than was the Soviet Union. The new Chinese empire is in fact the most serious geopolitical threat the US has faced since its foundation as a republic in the late 18th century.

Measured by total assets, the four biggest banks in the world are Chinese. China has outflanked bodies such as the International Monetary Fund and the World Bank to become the largest global creditor backed by its own financial services institutions such as the Asian Infrastructure Investment Bank. China is spearheading the global rebellion against a world financial system defined by the US dollar and its rentier finance capitalist economy; in mid-2023, for the first time, the renminbi topped the US dollar in China’s cross-border transactions. With a nearly US$1 trillion surplus in 2024 – the US hasn’t enjoyed a trade surplus since 1975 – China is the largest trading country and owner of half the world’s patents.

Despite US-led efforts to “decouple” from China by applying tariff penalties, boycotting its products and services, and banning the sale and import of new communications equipment from Huawei, ZTE and other Chinese companies, China’s economy – unlike the former Soviet Union – is an open political economy shaped by big business entangled with big government. It is a new species of state capitalism which attracts substantial upstream investment from major foreign companies such as Airbus, Samsung, Toyota, German chemicals giant BASF and Singapore’s OCBC bank and lithium-ion battery manufacturer Durapower Holdings. China, meanwhile, produces one-third of the world’s manufactured goods, more than the US, Japan, Germany, South Korea and Britain combined. China is the European Union’s and India’s main trading partners in goods. It is the principal investor and trader in the world’s most sizeable free-trade zone in Africa; and in Latin America, for the first time in two centuries of independence from the Spanish empire and de facto economic and military dependence upon the US, countries such as Chile, Peru, Ecuador, Uruguay and Colombia are actively drawing closer to China.

Globally significant shifts are also happening in China in matters of everyday life. After experiencing low levels of life expectancy like those in the West a century ago, life expectancy (78.6 years in 2022 compared with 51 in 1962, according to World Bank data) has surged beyond levels in the US, where healthy life expectancy at birth has been declining. Life expectancy is even higher among China’s 400-million strong middle classes, how are beneficiaries of the domestic push towards a “moderately prosperous society”. Global expansion has for them become a way of life. Loyal to the system, guided by dreams of house, car and money, frequenters of shopping malls, practised at the art of keeping their heads down – follow the party, but listen to your wife, runs a common joke – the social significance of the new middle classes has been boosted by overseas studying and by massive state investments in higher education: a nearly 10-fold increase during the past two decades. China now produces more STEM graduates than India, the US, Japan, Germany, France, Italy, Britain and Canada combined.