The 21st century was supposed to be the "American century", or the "Asia-Pacific century"; the underlying assumption being that it would be economically dominated by the United States, Australia, Russia, Canada and Mexico, along with China, Japan, Taiwan, India and South Korea.
In the first of two parts, Interactive Investor questions whether it is slowly but surely being renamed the "Chinese century".
The latest Economist projection suggests China will overtake America in 2018. Not surprising, since between 1978 and 2010, China's real economy grew by almost 40 times.
China hasn't always been the golden goose. In 1980, most Chinese has an income about 60% to 70% lower than citizens in other major Third World countries such as Indonesia, Nigeria, Pakistan, Kenya and Haiti. However, Deng Xiaoping's free market reforms in 1978 left these countries, and other developed ones, eating China's economic dust.
By 1985, the Economist praised China's 700 million peasants for having doubled their agricultural production in just seven years, an achievement unparalleled in world history.
Incomes in China have nearly doubled every decade for almost 40 years, with the real wages of workers outside the farming sector rising about 150% over the last 10 years alone. In contrast, median American incomes have been stagnant over that time period. In fact, China accounted fully for the drop in global poverty rates from 1980 to 2008 - while the number of Chinese living in dire poverty fell by a remarkable 662 million, the impoverished population in the rest of the world actually rose by 13 million.
Chinese industrialisation has been just as impressive, with China quadrupling its industrial output over the last decade alone.
Against this picturesque Chinese story, America's situation seems dire.
Demographic time bomb
Whether you agree with China's one-child policy or not, according to standard projections, China's population in 2050 will be almost exactly what it was in 2000, with the country having achieved the population stability typical of advanced, prosperous societies. Of course, there are far too many men and not enough women - an important demographic time bomb the government needs to address.
Still, in comparison, the rate of America's demographic increase passed that of China over 20 years ago and has been greater every year since, sometimes by as much as a factor of two.
According to research from the Pew Center, barely half of 18 to 24-year old Americans are currently employed, the lowest level since 1948. Nearly 20% of men ages between 25 and 34 are still living with their parents, while the wealth of all households headed by those younger than 35 is 68% lower today than it was in 1984.
While China's wealth distribution is far from equal, the rapid concentration of American wealth continues apace: the richest 1% of America's population now holds as much net wealth as the bottom 90-95%.
US national debt, at a crippling $16 trillion (£9.8 trillion), is being funded by government IOUs. Accounting firm Deloitte calculates that interest payments on the national debt alone are expected to total some $4.2 trillion over the next decade. Foreigners own about $5 trillion of America's debt, with China alone holding $1 trillion. This has resulted in some hinting at a risk that the rest of the world will lose its appetite for this non-functional US product, leading to a collapse in the dollar as well as the standard of living.
Nigel Green, chief executive of independent financial adviser deVere Group, deems it "highly unlikely" that the dollar will fall out of favour. "Indeed, with China downgrading its growth to 7.5% for 2012, the world's appetite for the US dollar, widely-viewed as a 'safe haven', is likely to increase," he says.
Christopher Clarke, hedge fund manager at Lawrence Clarke Investment Management, disagrees vehemently with Green, saying that there is a "huge and guaranteed risk" that the rest of the world will lose its appetite for US debt unless it gets a grip on it's out-of-control spending.
In fact, he believes the US debt is the "true" risk globally, not Europe. With the massive debt on its balance sheet, Clarke stresses that even a slight move higher in its interest rates would mean that the global economy would face a whole new challenge: "With trillions of dollars of structured products and unquantifiable derivatives products on US banks' balance sheets - all susceptible to the slightest increase in US interest rates - this could very quickly become a self-fulfilling prophecy."
For part two, read: China vs America: Can the superpowers work together?