The Rise and Fall of Modern Empires

America’s global economic dominance has been declining since 1998, well before the Global Financial Crisis. A large part of this decline has actually had little to do with the actions of the US but rather with the unraveling of a century’s long economic anomaly. China has begun to return to the position in the global economy it occupied for millenia before the industrial revolution.

In 1950 China’s share of the world’s population was 29%, its share of world economic output (on a PPP basis) was about 5%. By contrast the US was almost the reverse, with 8% of the world’s population the US commanded 28% of its economic output. By 2008, China’s huge, centuries-long economic underperformance was well down the path of being overcome. Based on current trends China’s economy will overtake America’s in purchasing power terms within the next few years. The US is now no longer the world’s sole economic superpower and indeed its share of world output (on a PPP basis) has slipped below the 20% level which we have seen was a useful sign historically of a single dominant economic superpower. In economic terms we already live in a bipolar world. Between them the US and China today control over a third of world output (on a PPP basis). Source: Deutsche Bank (2015)  - Long-Term Asset Return Study.