China and Europe are also encroaching on America’s technological dominance. In 2020, the United States accounted for about 25 percent of global R&D investment versus 69 percent in 1960. China has increased its share from 4.8 percent of global spending in 2000 to 23 percent in 2020, and Europe accounts for around 22 percent. China is far and away the largest producer of patents, more than double that of the United States. It is also the largest market for electric vehicles. It sold 22 million passenger vehicles in 2022, compared with less than 13 million in Europe and the United States. Fearful of the competition from cheaper and technologically superior Chinese cars, the European Union is threatening to raise tariffs on its imports, which Beijing is countering by opening a factory in Hungary. The Biden administration may follow suit, prodded by pressure from the bipartisan United States House Select Committee on Strategic Competition between the United States and the Chinese Communist Party to ban an array of imports.

As growth of 4.9 percent in the third quarter of 2023 attests, the United States has nonetheless continued to demonstrate its economic resilience despite the great recession of 2008-09 and the COVID-19 pandemic. Powered by the Biden administration’s Inflation Reduction Act, CHIPS Act, and Infrastructure Investment and Jobs Act, the United States has created roughly 14 million jobs, according to the Bureau of Labor Statistics, and unemployment has declined to 3.7 percent. China, meanwhile, is stagnating under massive government debt and deflation from an unraveling property market, slowing exports, an aging population, and inflexible leadership.

Still, it may be premature to herald the new American renaissance as New York Times columnist David Brooks has done. The increase in America’s GDP relative to Europe’s is partly a function of the euro’s declining value. And while China’s sputtering economy may replicate the economic crisis in Japan after its asset bubble burst in 1990, regional growth rates historically fluctuate. Asia produced 61 percent of world output in 1820 compared to 25 percent from Europe, only 20 percent in 1950, but 48 percent in 2018 versus Europe’s share of 15 percent.

To be sure, declining energy prices and the apparent end of the Federal Reserve’s interest rate hikes have increased the prospect of a soft landing. Even though inflation fell to 3.1 percent by the end of 2023, the message from the index of leading economic indicators is that a recession may lie ahead, according to the Conference Board. U.S. growth is further likely to be hampered by China’s continuing economic struggles. China is the largest trading partner of some 120 countries, including Japan, South Korea, the Association of Southeastern Asian Nations (ASEAN), and the EU. It is America’s third-largest export market and the largest purchaser of U.S. treasury bonds. While China’s deflationary spiral has benefited countries battling inflation, anemic demand has hurt exporters of industrial goods as well as the tourism industry.

By the same token, the prospect that China will recover from its current malaise should not be dismissed. According to a study by the Australian Strategy Policy Institute, it enjoys a technological lead over the United States in thirty-seven of forty-four fields, from AI to robotics. China graduates 1.4 million engineers annually and dominates the supply chain of rare earth materials, controlling 70 percent of their extraction and 90 percent of the processing.

The threat to American economic primacy presented by China’s trade-distorting subsidies and theft of intellectual property is only one of the reasons the Biden administration has opted for industrial policy. Bidenomics also aims to produce new manufacturing jobs for working- and middle-class Americans. Critical of the inequality produced by unfettered free trade, Biden avers that industrial policy will lead to a more egalitarian and geopolitically secure society.

Both propositions are dubious. China has already responded to Washington’s ban on the export of computer chips by restricting exports of gallium, germanium, and graphite—elements used in semiconductor manufacturing, fiber-optic networks, and military kits—and more recently, graphite, a component of electric vehicle batteries. Expanding supply chains to other producers of rare earths is economically prudent. But even if the United States can find alternative sources in, say, Vietnam, Australia, India, or Peru, it is not likely to erode China’s dominant position or alter the reality that America’s Indo-Pacific partners remain dependent on their economic ties with Beijing. Industrial policy is far more likely to reinforce the tit-for-tat dynamic that is playing out between Washington and Beijing and divide the world into competing blocs.

Industrial policy will also undermine the efficiencies of the international trading system that lowered the cost of goods and raised real incomes during the 1980s and 1990s. While it is true that cheap Chinese imports destroyed manufacturing jobs in the industrialized world, the decline mainly resulted from the labor-cutting efficiency of modern technology and shifting comparative advantage. The cumulative effects of economic nationalism will raise the cost of goods to American consumers and inhibit innovative research on climate change. Industrial policy has already prompted the EU to launch a “Buy Europe” project to incentivize the domestic production of green technology and semiconductors. India, South Korea, Australia, and Canada are acting correspondingly.

The United States and other wealthy nations’ gravitation toward protectionism and deglobalization will further create hardships for low-income countries, which lack the ability to provide lavish subsidies to domestic producers. Worse, it will erode the economic progress they have made since 1990 in raising the incomes of the world’s poorest populations. Protectionism will constrict participation in global value chains, deprive poor countries reliant on farming of export income needed to pay for imports and cover debt service for loans and create more failed states, thereby sabotaging economic development and intensifying global instability.

Political Authority: In confronting the geostrategic challenges posed by Russian revanchism and Chinese militancy, the United States remains the keystone of its alliances in Europe and Asia. However, the uncontested political power that it wielded during the Cold War and in the decade after the collapse of the Soviet empire is fading. Shifting geopolitical interests and alignments among emerging regional powers who demand a voice in global governance is a major reason. Dissention between the United States and its allies in Europe and Asia on a host of global threats is another.

Intent on asserting their views, countries in the rich and developing world have increasingly impugned Washington’s policy preferences. In some cases, dissent has been broad-based; in others, powerful voices have stymied the United States. Undeterred by President Bill Clinton’s opposition, Canadian foreign minister Lloyd Axworthy challenged the world to ban landmines, which produced 164 signatures to the Ottawa Treaty in 1997. Though many countries joined the “coalition of the willing” in the second Gulf War in 2003, U.S. military action was publicly opposed by France, Germany, Russia, and the European Parliament, as well as by Latin America, the Arab League, and the African Union.

The collapse of the Doha Round of trade negotiations in 2008, on the other hand, resulted from Sino-Indian insistence on agricultural subsidies over U.S. objections. In 2010, Brazil and Turkey defied President Barack Obama’s decision to ratchet up sanctions on Iran, reviving earlier proposals for a fuel swap deal. Although the Obama administration proceeded with its sanctions resolution, Turkey and Brazil had both contested Washington’s authority and elevated their international status.

Continuing criticism of the West for its quasi-colonial dominance of the international economic and political order further reflects the Global South’s clamor for a voice in international decision-making. Irritated by the persistent gap in GDP per capita between North and South, developing countries have long sought to curb the de facto veto power the United States and Europe enjoy as respective heads of the World Bank and IMF. The Asian Infrastructure Investment Bank created by China in 2016, which now numbers 109 countries, and the BRICS Development Bank have emerged as a sort of second Bretton Woods to challenge the West’s dominance.

Thirty-five countries have more recently registered their resentment toward the rich world by abstaining from censuring Russia’s invasion of Ukraine in the United Nations vote in October 2022. Many have chastised the United States for provoking the conflict, deriding the hypocrisy of the rules-based order that sanctions Russia but ignores Israel’s unremitting absorption of Palestinian territory.

Emerging powers are also becoming more transactional in their relationships with global adversaries. Although Indian prime minister Narendra Modi implicitly reproached Russian president Vladimir Putin in the fall of 2022, saying, “Today’s era is not an era of war,” India has expanded its trade ties with Russia. Along with China, Turkey, and Brazil, it has massively purchased discounted Russian oil, which helps Moscow sustain its war. A founding member of the BRICS, India has joined the Quadrilateral Security Dialogue along with the United States, Australia, and Japan to counter China’s growing influence in Asia. Yet India remains reliant on China for cheap consumer goods and the critical semiconductor chips and circuit boards on which its industries depend.