Weekly Geopolitical Report – The U.S.-China Balance of Power: Part III (February 1, 2021)

by Patrick Fearon-Hernandez, CFA | PDF

In Part II of this report, we provided a head-to-head comparison of U.S. and Chinese military power.  Obviously, military power is the ultimate source of coercion that one country can use to influence others.  During non-conflict times, however, countries tend to use less violent means of influence.  One of the most important such peaceful sources of power is economic.  This week, in Part III, we examine the relative economic power of the U.S. and China, mostly in terms of the leverage they gain from importing enormous amounts of goods and services from other countries and providing investment capital abroad.  Next week, Part IV will describe the relative diplomatic positions of the two countries around the world.  Finally, Part V will dive into the associated opportunities and threats for U.S. investors.

Read the full report