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RAY DALIO VS PETER ZEIHAN: WILL CHINA ECLIPSE THE U.S. AS A WORLD POWER BY THE MID 21ST CENTURY?

INTRODUCTION:

Following up one our meetup from August entitled "Understanding the 'Chip War' & 'AI Race' between the U.S. & China, in today's discussion we'll address the broader debate over whether China looks poised to overtake the United States as the global superpower by 2050. I'm framing this primarily as a debate between investor Ray Dalio and geopolitical analyst Peter Zeihan since they have been on opposite sides of the China issue for about a decade and each of them has an interesting forecasting model that's worth considering. However, keep in mind that neither Dalio or Zeihan are academics publishing peer-reviewed research. Ray Dalio has a MBA from Harvard and is the founder of the world's largest hedge fund Bridgewater Associates, and Peter Zeihan has a postgrad degree in Asian studies and used to work for George Friedman's forecasting firm Stratfor before striking out on his own. They write for a popular audience mostly composed of investors & foreign policy buffs rather than scholars who could subject their work to a deeper critique. But to paraphrase Nietzsche, "The errors of overconfident pundits are more valuable than the truths of modest scholars." At the very least, pundits tend to state their case boldly enough to provoke more nuanced scholarly critiques. So we'll consider their models' strengths & limitations and include the views of international relations scholars, political scientists, economists, and other geopolitical experts who have reviewed their works and weighed in on either side.

In the first section, we'll look at the case for China becoming the next global superpower amid U.S. decline that Ray Dalio presents in his books Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail (2021) and How Countries Go Broke: The Big Cycle (2025). We'll look at how Ray Dalio's ""Big Cycle" theory depends on his company's analysis of 5 major forces (debt/credit cycle, internal order/disorder cycle, external geopolitical order/disorder cycle, acts of nature, and technology) and allegedly explain the rise & fall of major powers in history - which he sees playing out currently with the decline of the U.S. and the rise of China. We'll see how his optimism in China was shaken by its mishandling of COVID & the Evergrande property crisis, but how his concerns about mounting U.S. debt & political turmoil under Trump make him even more pessimistic about America - and how the economist Noah Smith agrees. We'll also see where the ecologist-cum-historian Peter Turchin agrees with Dalio and where they disagree, which is interesting since Turchin has his own cyclical theory of history which is focused more on internal social tensions than global economic dominance like Dalio. Turchin's structural-demographic theory and its implications for the U.S. are outlined in his book Ages of Discord: A Structural-Demographic Analysis of American History (2016) but he hasn't yet run his analysis on modern China.

In the second section, we'll look at the case for an impending collapse of China and a retrenching but resilient America that Peter Zeihan presents in his books Disunited Nations: The Scramble for Power in an Ungoverned World (2020) and The End of the World Is Just the Beginning: Mapping the Collapse of Globalization (2022), and The Accidental Superpower: Ten Years On (2023) which is an updated version of his 2014 bookThe Accidental Superpower: The Next Generation of American Preeminence and the Coming Global Disorder. Zeihan's pessimistic view of China's future hinges on its lack of agricultural & energy independence, a debt-fueled investment growth model that's unsustainable, increasing authoritarianism which hurts innovation & problem-solving, and accelerated demographic decline due to Mao's one-child policy - with the latter factor prompting Zeihan to think China will "grow old before it grows rich". We'll compare this to similar arguments made by the political scientist Michael Beckley in his books China’s Century? Why America’s Edge Will Endure (2011) and The Peril of Peaking Powers: Economic Slowdowns and Implications for China's Next Decade (2023). We'll also consider arguments from Stephen Brooks & William Wohlforth's article “The Myth of Multipolarity: American Power’s Staying Power” in Foreign Affairs back in 2023.

In the third section, we'll look at some intermediate scenarios where experts have projected that China will rise to a regional power in East Asia but not a global superpower and the U.S. will stagnate or decline slightly - perhaps becoming merely a regional power in North America - leading to a "bipolar" or "multipolar" world by 2050. Since I've linked the Belgian economist Joeri Schasfoort's videos critiquing both Dalio & Zeihan, we'll start with his take on the coming multipolar world based on a review of recent studies in "geo-economics". Then we'll discuss some articles in Foreign Policy & Foreign Affairs that can give us a sense of how some prominent foreign policy scholars are thinking about this topic.

A FEW CAVEATS ABOUT LISTENING TO PUNDITS VS SCHOLARS & EVALUATING GEOPOLITICAL FORECASTS:

You'll notice that the critiques offered of both Ray Dalio & Peter Zeihan's theories in the videos from Joeri Schasfoort are rather scathing at several points and could lead you to think we should dismiss both of them as cranks. However, towards the end of his critique of Zeihan's predictions of an imminent China collapse, Schasfoort says: "If you expected Mr. Zeihan to be an oracle of the truth, then I think this shows you should really reconsider. However, for me personally... following Zeihan is not about learning the absolute truth. It is about getting interesting and provocative insights... I've always taken his extreme predictions with a very large grain of salt.... [But] I will continue to follow Mr. Zeihan to get a broad overview and an interesting perspective on global affairs."

If you've read the political scientist Philip Tetlock's book Superforecasting (2015) about his research on geopolitical forecasting with the Good Judgement Project, his categorization of forecasters into "foxes" and "hedghogs" is similar to how a careful scholar like Schasfoort thinks about the value of listening to a bold pundit like Dalio or Zeihan. As Tetlock explained in a talk to the Long Now Foundation:
"Hedgehogs have one grand theory... which they are happy to extend into many domains, relishing its parsimony, and expressing their views with great confidence. Foxes, on the other hand are skeptical about grand theories, diffident in their forecasts, and ready to adjust their ideas based on actual events. The aggregate success rate of Foxes is significantly greater... especially in short-term forecasts. And Hedgehogs routinely fare worse than Foxes, especially in long-term forecasts. They even fare worse than normal attention-paying dilletantes -- apparently blinded by their extensive expertise and beautiful theory. Furthermore, Foxes win not only in the accuracy of their predictions but also the accuracy of the likelihood they assign to their predictions-- in this they are closer to the admirable discipline of weather forecasters. The value of Hedgehogs is that they occasionally get right the farthest-out predictions... But that comes at the cost of a great many wrong far-out predictions... Hedgehogs annoy only their political opposition, while Foxes annoy across the political spectrum, in part because the smartest Foxes cherry-pick idea fragments from the whole array of Hedgehogs." [emphasis added].

One of the possible criticisms I've anticipated about the way I've framed this topic is that merely looking at the bold predictions of a couple non-scholars and a few critiques of their models doesn't give us a broader sense of the expert consensus on this issue. However, as far as I can tell, there's no polls of academic experts like the College of William & Mary's TRIP Program (which surveys American IR scholars) or the University of Chicago's Kent Clark Forum (which surveys US & European economists) that can give us a clear sense of what most of them think geopolitics will look like in 2050, since they tend to focus on more near-term predictions and policy recommendations.

You can find long-range geopolitical predictions on Metaculus, e.g. "Will there be a US-China war before 2035?", "Will China's nominal GDP be larger than the U.S. GDP in 2050?", "What will be the China-to-USA GDP ratio in 2050?", "When will China surpass the United States economically, militarily, and scientifically?", but the participants appear to mostly be interested amateurs rather than academic experts. The alternative are various studies that make assumptions about China & US demographics & economic growth to make GDP projections that could help us estimate if/when China's GDP will exceed that of the US, for example:

  • Citigroup forecast with 3 scenarios : China's GDP rapidly overtaking US GDP by 2028, middle case with China's GDP catching up by 2035, and slow case with China's GDP catching up by 2050s.
  • Centre for Economics and Business Research (CEBR) forecast that predicts "China will be the world’s largest economy for only 21 years [starting in 2036] before the US overtakes again in 2057. And by 2081 India will have overtaken the US".
  • CUNY's Economic Studies Group forecast that predicts China will catch up to US GDP around 2031 but "its economic power would still be very low compared to the United States... [since] for a country to become the No.1 economic power, it must first be self-sufficient in food and energy supplies, or at least have access to resources in the event of a food or energy crisis."

Which of these forecasts should you trust? Are there other better-quality forecasts? Unfortunately, I don't have the training to independently evaluate them or even to know which forecasts are considered the best. However, I did see that the economist Noah Smith has a blog post back in January where he explains some of the statistical difficulties in comparing the Chinese & US economy to make these forecasts. We should also note that economic forecasts can help generate projections of a country's military power in the future if it increases military spending accordingly. But this entails further assumptions about the efficiency of the spending which can be eroded by corruption, the extent to which purchasing power parity (PPP) influences how much "bang for its buck" a country gets, and of course the strategy of deploying its forces in a war. Check out Michael Beckley's 2018 paper "The Power of Nations: Measuring What Matters" and Jacques Fontanel's 2022 article "Is military expenditure a reliable indicator of victory in an interstate war?" for some important caveats.

RELEVANT MATERIALS FROM PAST MEETUPS:

Back in August, we had a meetup entitled " where we also discussed the importance of data centers to the tech race between the U.S. and China, both domestically as each country seeks to build these data centers more quickly as well as the electrical power generation needed to run them, and internationally as each country helps build friendly data centers in other countries.

In June, we had a meetup entitled "Trump's Tariffs, The Dollar & The Mar-a-Lago Accord" where we looked at some concerns expressed by the economist Kenneth Rogoff about how mounting U.S. national debt and Trump's tariffs are leading to "de-dollarization" (reduction in the use of U.S. dollars in world trade), and how this could possibly lead to the dollar losing its world reserve currency status in the near future. This is relevant to this discussion, because this scenario is what Ray Dalio predicts will lead to China taking over as the new global hegemon.

In April, we had a meetup entitled "Is There a 'Trump Doctrine'?" where we discussed various theories about the ideology underlying Trump's foreign policy. In the 2nd section, we discussed the possibility the Trump wants to pull a "reverse Nixon" and use concessions in the Ukraine War to turn Russia against China, while in the 4th section we discussed the theory that Trump has figured "if you can't beat them, join them" and wants to abandon traditional Western allies like NATO so he can pursue an anti-democratic alliance with both Russia & China.

In Aug. 2023, our member Chris led a discussion entitled "Understanding the China-Taiwan Conflict" where we analyzed the prospects for a Chinese invasion of Taiwan that might result in direct military conflict between the U.S. and China, since Taiwan is strategically important as part of the "first island chain" that constrains China's navy and as the world's major manufacturer of the most sophisticated semiconductor chips.

Back in March 2022, we had a meetup entitled "Are We Headed For World War 3?" In the 2nd section, we discussed the political scientist Graham Allison's theory of the "Thucydides trap" and how it predicts conflict between a rising power and a ruling power, as well as the shift from Hu Jintao's "Peaceful Rise" policy to Xi Jinping's more aggressive "Wolf Warrior Diplomacy".

Since we're comparing Peter Turchin's cyclical "structural-demographic theory" to Ray Dalio's "Big Cycle", it may be worth it to refer back to prior meetups that discussed Turchin's theories like the 4th section of a Skeptic meetup in Jan. 2021 entitled "Bad History & Our Political Crisis", and more recently in the 1st section of our Feb. 2025 meetup entitled "Elites & Counter-Elites" and the 4th section of our meetup last month entitled "Is Political Violence Increasing in America?".

Aside from these meetups, I also linked a couple third party discussions of US-China rivalry in the spring of 2024 such as the Cato Institute's talk with IR scholar Ketian Zhang about her book China’s Gambit: The Calculus of Coercion (2023) and the Braver Angels' discussion with Col. Grant Newsham about his book When China Attacks: A Warning to America (2023).

DIRECTIONS ON HOW TO PREPARE FOR OUR DISCUSSION:

The videos & articles you see linked below are intended to give you a basic overview of some of the major debates over whether or not China will displace the U.S. as a global superpower. As usual, I certainly don't expect you to read all the articles prior to attending our discussion. The easiest way to prepare for our discussion is to just watch the numbered videos linked under each section - the videos come to about 53 minutes total. The articles marked with asterisks are just there to supply additional details. You can browse and look at whichever ones you want, but don't worry - we'll cover the stuff you missed in our discussion.

In terms of the discussion format, my general idea is that we'll address the topics in the order presented here. I've listed some questions under each section to stimulate discussion. We'll do our best to address most of them, as well as whatever other questions our members raise. I figure we'll spend about 40 minutes on each section.

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I. RAY DALIO'S BULLISH VIEW ON CHINA AS THE NEXT SUPERPOWER ACCORDING TO HIS "BIG CYCLE" THEORY:

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1.) Joeri Schasfoort (Money & Macro), "Economist Fact-Checks Ray Dalio's China's inevitable rise story" (video - 15:25 min)
https://www.youtube.com/watch?v=s1iv0q_SW3E

II. PETER ZEIHAN'S BEARISH VIEW ON CHINA DUE TO DEMOGRAPHIC & GEOGRAPHIC CONSTRAINTS:

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2.) Joeri Schasfoort (Money & Macro), "Economist Fact-Checks Zeihan's China Collapse Story" (video - 23:50 min)
https://www.youtube.com/watch?v=XupM5_zHDbM

III. INTERMEDIATE SCENARIOS WHERE CHINA BECOMES A REGIONAL POWER & THE U.S. STAGNATES OR HAS A MILD DECLINE LEADING TO A "BIPOLAR" OR "MULTIPOLAR" WORLD:

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3.) Joeri Schasfoort (Money & Macro), "What the new global economic order will look like" (video - 16:23 min, listen to 15:18)
https://www.youtube.com/watch?v=8Z_56-BOpcQ

  • Jo Inge Bekkevold, "No, the World Is Not Multipolar [but Bipolar]: The idea of emerging power centers is popular but wrong—and could lead to serious policy mistakes." (Foreign Policy)
    https://archive.ph/Gz2uL
  • Emma Ashford & Evan Cooper, "Yes, the World Is Multipolar: And that isn’t bad news for the United States." (Foreign Policy)
    https://archive.ph/BuGlM
  • Joshua Shifrinson, Anne-Marie Slaughter, Bilahari Kausikan, Robert Keohane, Stephen G. Brooks & William C. Wohlforth, "The Long Unipolar Moment? Debating American Dominance" (Foreign Affairs)
    https://archive.ph/49mgl
  • Ian Bremmer, "The Next Global Superpower Isn’t Who You Think: What happens when the world is no longer unipolar, bipolar, or even multipolar?" (Foreign Policy)
    https://archive.ph/DHNrY

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