This post originally appeared on Real Time Economics.
It won’t be long until the U.S. is eclipsed economically by China—and Americans need to start thinking about how to adjust to such a world.
“Attitudes in the U.S. are going to have to change, because the U.S. will not permanently be the global leader,” Mr. Bullard said.
China is already the largest economy in the world after the United States, and is growing much faster than the U.S. Not too far in the future — estimates range from as soon as 2016 to as “distant” as 2028 — it will surpass the American economy in size.
Most likely, China will eventually match the U.S. in per capita income terms as well. With a population about four times as large as America’s, that would imply a massive shift in the global balance of power.
In that case, “the U.S. would be playing a role to China similar to the role the U.K. plays to the U.S. today,” Mr. Bullard said. “People think it’s 50-75 years away but it’s probably only 25 or 20 years away, something like that.”
China’s economy currently is a little more than half the size of America’s, IMF data show, clocking in at $8.9 trillion in 2013 versus $16.7 trillion for the U.S.
But China’s economy is growing much more quickly, targeting growth of about 7.5% this year. In contrast, the U.S. economy will be lucky to grow by 3%.
Then there’s India, another economy of a billion-plus people that’s also growing quickly. Eventually, Mr. Bullard said, he can foresee a tri-polar world in which China and India are the major economic powers, counterbalanced by a bloc of the United States, Europe and Japan, whose populations together will total about one billion people.
“We’ve said the U.S. is a superpower, an economic superpower. But these are giants, they’re bigger than a superpower,” he said. “What would that world be like, both economically and politically? I think that’s really hard to understand. How much would the Western bloc be willing to cooperate politically to be a counterbalance to China and India?”
Mr. Bullard offered few specifics of what such a world would look like, but did acknowledge that it might require some adjustment on the part of ordinary Americans like those he serves in the heartland.