During a recent bilateral meeting with U.S. President Donald Trump, Chinese President Xi Jinping reportedly described the United States as “a declining power.” The remark attracted global attention, but it was hardly new. Over the past several years, Xi has repeatedly framed the United States as a fading giant while portraying China’s rise as part of a broader historical shift from a declining West to an ascending East.
This narrative has become a central component of Beijing’s strategic messaging. Chinese officials and state media frequently argue that the balance of power is tilting irreversibly in China’s favor and that American decline is both inevitable and accelerating.
Yet a closer examination of the fundamental metrics that determine national power suggests a very different reality. Economic size, military strength, technological leadership, alliance networks, currency dominance, and soft power all indicate that the United States remains the world’s preeminent power. More importantly, the structural factors underpinning American influence appear considerably more durable than many forecasts of U.S. decline acknowledge.
When assessing national power, economic performance remains one of the most important indicators. Institutions that measure geopolitical influence place substantial weight on economic factors. The Asia Power Index published annually by Australia’s Lowy Institute, for example, assigns approximately one-third of its overall score to economic measures, including economic capability and economic relationships.
By this standard, the United States maintains a significant lead over China.
Nominal gross domestic product (GDP), rather than purchasing power parity (PPP), provides the most relevant measure of international economic influence because global trade, investment flows, sanctions, and financial transactions are primarily conducted in dollars. According to International Monetary Fund projections for 2026, the U.S. economy is expected to reach approximately $32.4 trillion, compared with China’s $20.9 trillion. That means the American economy remains roughly 1.5 times larger than China’s in nominal terms.
China does surpass the United States in PPP-adjusted GDP, reflecting lower domestic costs and greater purchasing power within its borders. However, PPP figures do not translate directly into international influence. Global investments, sovereign debt markets, commodity purchases, and reserve holdings continue to operate largely within the dollar-based financial system.
Perhaps even more revealing is how dramatically expectations regarding China’s economic trajectory have changed over the past decade.
In the early 2010s and early 2020s, many economists confidently predicted that China would overtake the United States as the world’s largest economy by around 2030. Major institutions and analysts projected a relatively smooth continuation of China’s rapid growth model.
The Centre for Economics and Business Research (CEBR), for instance, predicted in 2021 that China would surpass the United States by 2030. Similar forecasts were made by economists such as Justin Yifu Lin, the former World Bank chief economist, and by consulting firms including PwC.
Those predictions have largely been revised or abandoned.
Today, a growing number of economists believe that China may not surpass the United States until the middle of the century, if at all. Some projections push the crossover point beyond 2060, while others suggest it may never occur.
London-based Capital Economics has argued that slowing productivity growth and worsening demographic trends could prevent China from ever overtaking the United States. The consultancy points to a shrinking workforce and structural economic constraints that are likely to weigh on Chinese growth for decades.
The Organisation for Economic Co-operation and Development (OECD) has similarly pushed timelines further into the future. Even economists who remain optimistic about China’s long-term prospects have become considerably more cautious than they were a decade ago.
One prominent voice highlighting this shift is Kishore Mahbubani, the former Singaporean diplomat and past president of the United Nations Security Council. Mahbubani has argued that contrary to popular assumptions, the gap between the two economies may actually widen over time rather than narrow.
The reasons behind China’s slowing trajectory are increasingly clear.
The most significant challenge is demographics.
China’s population has now declined for four consecutive years. Despite the abolition of the one-child policy and the introduction of numerous incentives designed to encourage childbirth, birth rates continue to fall. Recent government statistics showed births dropping to historic lows while deaths have risen steadily as the population ages.
China’s fertility rate has fallen to around one child per woman, far below the replacement rate of 2.1. Demographers warn that such a low fertility rate creates long-term structural problems that are extremely difficult to reverse.
United Nations projections suggest China’s population could shrink dramatically over the course of this century. A smaller population means fewer workers, lower consumer demand, rising pension costs, and increasing pressure on public finances.
Many analysts describe the situation as China “getting old before it gets rich.” Unlike Japan, which entered demographic decline after achieving very high levels of per-capita wealth, China faces these challenges while still attempting to complete its transition into a high-income economy.
As a result, China may increasingly confront a combination of slower growth, weaker productivity gains, and mounting social welfare obligations.
The United States, by contrast, enjoys a considerably more favorable demographic outlook.
Thanks to immigration and comparatively higher fertility rates, America’s population is expected to continue growing throughout the coming decades. Population growth supports labor force expansion, innovation, entrepreneurship, and consumer demand—all critical ingredients for sustained economic dynamism.
Economic strength, however, is only one pillar of national power.
Another critical advantage enjoyed by the United States is the dominance of the U.S. dollar.
The dollar remains the world’s primary reserve currency and the backbone of the international financial system. More than half of global foreign-exchange reserves are held in dollars, while the majority of international payments continue to be processed through dollar-based mechanisms.
By comparison, China’s renminbi remains a marginal player in global finance. Despite Beijing’s efforts to internationalize its currency, the yuan accounts for only a small share of global reserve holdings and international transactions.
This imbalance carries enormous geopolitical significance. Dollar dominance provides Washington with unparalleled leverage through sanctions, financial regulations, and access to global capital markets. No other country possesses a comparable tool of economic statecraft.
Military power presents a similar picture.
The United States continues to outspend every other nation on defense by a substantial margin. American defense expenditures exceed $900 billion annually, while China’s official defense budget remains below $300 billion.
Beyond spending, Washington enjoys advantages that are difficult to quantify but immensely valuable: global reach, alliance networks, logistics capabilities, and decades of operational experience.
The United States leads NATO, the world’s most powerful military alliance, and maintains extensive security partnerships across Europe, the Middle East, and the Indo-Pacific. American alliances with countries such as Japan, South Korea, Australia, Canada, and numerous European states significantly multiply U.S. power.
China lacks a comparable alliance architecture.
Moreover, the United States maintains hundreds of military facilities and access agreements around the world, enabling rapid force projection across multiple regions simultaneously. China’s overseas military footprint remains limited by comparison.
Although Beijing has made remarkable advances in missile technology, drones, naval construction, and cyber capabilities, significant gaps remain in areas such as nuclear deterrence, undersea warfare, carrier operations, and global logistics.
The technological dimension further reinforces American advantages.
The United States remains the global leader in many of the industries that will define future power, including artificial intelligence, advanced semiconductors, aerospace, biotechnology, and quantum research. Many of the world’s most influential technology companies, research universities, and venture capital ecosystems remain concentrated in the United States.
American soft power also continues to exert a powerful influence. Hollywood, the U.S. music industry, elite universities, and global media platforms help shape international perceptions in ways that China has struggled to replicate.
Likewise, institutions created or heavily influenced by Washington—including the International Monetary Fund, World Bank, and numerous international organizations—continue to reflect significant American influence.
None of this suggests that China is weak. On the contrary, China has emerged as one of the most consequential powers in modern history and will remain a central actor in global affairs for decades to come.
Nor does it mean the international system is unipolar in the same way it was during the immediate post-Cold War period. The world is becoming increasingly multipolar, with regional powers playing larger roles in shaping global events.
However, multipolarity should not be confused with American decline.
The United States retains an economy roughly 50 percent larger than China’s in nominal terms, commands the world’s dominant reserve currency, maintains unmatched military alliances, leads in many critical technologies, and continues to wield enormous soft power.
Meanwhile, China faces serious demographic headwinds, a shrinking workforce, slowing economic growth, limited currency internationalization, and persistent challenges in expanding its global influence.
For these reasons, Xi Jinping’s characterization of the United States as a “declining power” appears less like an objective assessment and more like a political narrative designed to reinforce confidence in China’s rise.
