Leadership: Coping With Compounding

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January 5, 2016: The growth of the Chinese economy, and the resulting expansion of Chinese military power, has not gone unnoticed. Less publicized is the shift in global economic power once the Cold War ended in 1991. At that point the U.S. and EU (European Union) had over half the world GDP. The Soviet Union had about ten percent and China two percent. The Soviet Union, and its economy was falling apart (hence the dissolution of the Soviet Union). By the end of the 1990s Russia (half the size of the Soviet Union) had three percent of world GDP, China seven percent, the EU was 24 percent and the U.S. 21 percent. China began growing at ten percent a year in the 1980s and kept going. The compounded growth really adds up if you can sustain it over several decades. By 2015 China was 17 percent of world GDP, Russia three percent, the EU 17 percent and the U.S. 16 percent. Projections for 2020, even taking into account showed down Chinese growth, have China with 19 percent of world GDP, Russia three percent, the EU 15 percent and the U.S. 15 percent.

One special aspect in all this is the fact that China has more people than the EU, the U.S. and Russia combined. China also has the worse pollution problems and much more corruption than the West. China also has problems with creating and maintaining effective armed forces in peacetime. This has been a problem for centuries and a major reason for that is the endemic corruption which has been particularly bad in the Chinese military. This prevents China from turning that growing economic power into equally large military clout. But China has nukes, growing territorial ambitions and leaders willing to risk all to win more support from their increasingly affluent population. So the Chinese threat is definitely bigger and more dangerous.

 


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