NEW YORK - The idea that America is losing its superpower crown to China is pervasive, but a closer look at financial competition reveals a different reality: the United States is winning decisively by default.
Never has the gap in financial power between the world’s two largest economies been this wide. While China accounts for 17% of global GDP, the yuan comprises only 2% of central bank reserves-trailing 30 to 40 years behind previous superpowers at a similar stage.
The dollar’s dominance grants the US imperial privilege: lower borrowing costs, the ability to run large deficits, and immense geopolitical leverage through control of the financial network. The US currency has been effectively weaponized.
China remains an incomplete superpower because its financial system is tightly sealed. Foreigners own less than 5% of Chinese stocks and bonds-one-fifth the level in the US. Money supply has surged to 230% of GDP, much of it trapped in a battered property market.
Beijing has taken small steps to internationalize the yuan, but without a bolder opening of its capital account, China will never challenge America’s financial dominance. As Ruchir Sharma of Rockefeller International concludes, the US remains the world’s market of choice.