This is not solely because of the simmering tensions on the Korean Peninsula and the numerous flash points scattered across the East and South China Seas. No, the main reason for the hardening positions on both sides lies in the mounting challenges to domestic prosperity that cast a shadow on both countries.

Prosperity in the United States, as the 2016 Prosperity Report reveals, has been stagnant over the past decade. The main driver of this is found in the Health category, with data showing worsening physical and mental health conditions among US citizens.

Low life expectancy is caused by a combination of rising obesity, growing anxiety and sadness, and reduced immunisation rates. In fact, US life expectancy at birth has risen by an average of just 1.17 years over the past ten years which not only lags behind China, but is also more than half a year less than the OECD average. It is little surprise then, that the US has dropped by 11 ranks in the health rankings over the past ten years. 


Coincidentally, it is in the Health category that China has achieved the biggest gains. A 23-rank boost in the past ten years helped China establish itself in the world’s top-40 performing countries in this category, only eight ranks lower than the US.

China’s biggest headache, however, is not in Health but in its poor ranking in the Social Capital category (ranking 140th in the world). The breakneck pace of modernisation and urbanisation has gradually eroded traditional social networks, while new forms of social cohesion and reciprocity have not yet taken root in the China’s fast-changing society.

This is seen clearly in China’s globally low scores on measures of trust and civic engagement. More worryingly for the country’s reformers, this social capital deficit has increasingly become a formidable obstacle to further social and economic reforms.

Ironically, both sides in the incoming Sino-US summit would benefit if they look across the table. The magical ingredient to China’s improving health status has been the provision of basic healthcare for all its vast population, despite having only a fourth of America’s wealth measured by GDP per capita. Besides a widely felt improvement in people’s health conditions, this move also helped shore up general satisfaction with the health system. The nature of the healthcare reform reduced fiscal pressure while ensuring the resources be allocated to people in genuine need. This model may not be best suited to the US (as it continues to grapple with finding the right balance between private and public healthcare provision) but the principle and the process of the reforms provides some lessons.

On the other hand, a vigorous civil society has always been the key to America’s success in maintaining one of the highest level of Social Capital in the world. The graph shows how respondents in each country answered questions about social capital. Chinese authorities could benefit from drawing out lessons from the American experience of providing a larger space for civil participation in social services, organising civil life, and promoting mutual trust and charitable activities.


Author: Fei Xue 

Visit the Legatum Prosperity Index to explore more.