The United States is undergoing a historically familiar phase of imperial decline, marked by internal dysfunction, economic overreach, and diminishing global credibility, alongside the rise of China and a broader shift toward a multipolar world order.
The United States, long the world’s undisputed superpower, is showing unmistakable signs of decline. Political paralysis, ballooning debt, and a fraying social fabric have shaken global confidence in America’s ability to lead. For the first time since World War II, nations are planning for a world where Washington is not at the center.
Every empire believes it will be the exception to history’s rule. But history has never been kind to those who mistake dominance for permanence. The pattern of rise and fall is as old as civilization itself — and America, for all its technological prowess, is not immune to it.
The symptoms are familiar. Spain, after plundering the Americas, drowned in its own gold — the “resource curse” before the term existed. Portugal, pioneer of maritime expansion, faded due to complex interplay of factors over centuries. The Dutch, whose 17th-century innovations created the modern capitalist system — the Amsterdam Exchange Bank and the Dutch East India Company — succumbed once rivals mastered their methods. Britain, the greatest empire of all, exhausted itself in two world wars and ceded supremacy to the United States.
Each believed its institutions unique and its dominance enduring. Each fell victim to arrogance, misjudgments, over reach and complacency.
The United States inherited Britain’s mantle after 1945. With half the world’s industrial output and a global network of alliances, it built an international order in its own image. The Bretton Woods system made the dollar the world’s currency; American bases ringed the planet; Hollywood and Silicon Valley projected soft power into every home.
But the end of the Cold War, instead of ushering in restraint, produced overreach. Two decades of wars in Iraq and Afghanistan cost over US$8 trillion and eroded moral authority. The 2008 financial crisis exposed the fragility of an economy addicted to debt and speculation. Meanwhile, de-industrialization hollowed out the middle class: manufacturing, once 28 per cent of GDP, now barely scrapes 11 per cent.
Late October the American national debt crossed US$38 trillion, larger than the country’s GDP. Infrastructure is decaying, life expectancy is falling, and public trust in government has plunged to historic lows. Political polarization has reached a point where governance itself is paralyzed with the longest shut down in history. Institutions once admired for stability now look brittle and partisan. The United States still commands power, but no longer - respect.
President Emmanuel Macron of France has urged European companies to stop investing in the United States. Mark Carney, the new Canadian Prime Minister declared the eight-decade-old economic order — on which the modern American empire was built — simply “over.” Sven Beckert, a distinguished history professor at Harvard advises Americans to stop clinging to the recent past – like other economic regimes before it, it is gone. Resurrection, he argues, is impossible and to aim for it is politically disastrous.
History abhors a vacuum. As American self-confidence erodes, China’s has surged. Over four decades, Beijing has lifted 800 million people out of poverty and built the world’s largest manufacturing base. In purchasing-power terms, China’s GDP now exceeds America’s. It leads in renewable energy, electric vehicles, and 5G infrastructure, and in many more fields of excellence. Producing a third of global industrial output it is the ‘factory of the world.’
Militarily, China is now formidable with some of the most advanced weaponry. Through the Belt and Road Initiative, China has extended influence across Asia, Africa, Middle and even Latin America — reshaping the global economic map.
Where America projects power through alliances, China projects it through trade and infrastructure. The U.S. has signed no less than 20 military agreements with different states during the last 25 years. China did not sign one. On the contrary, China signed about 25 economic partnership agreements including accession to WTO, with ASEAN and other regional blocs during this time. Over 120 countries now count China — not the U.S. — as their largest trading partner. The result is American dilution.
Every empire’s decline begins to show in its currency. The Portuguese real, Spanish silver peso, Dutch guilder, and British pound all lost global dominance as their empires faded. The U.S. dollar’s supremacy now faces similar strain.
At the start of the century, the dollar made up over 70 per cent of global foreign-exchange reserves. Today it hovers around 57 per cent. The BRICS nations are developing alternative payment systems and a potential common settlement unit. China and Saudi Arabia increasingly trade oil in yuan. Russia and India settle energy purchases outside the dollar. Even U.S. allies like France have traded gas in yuan.
The dollar remains unrivalled in liquidity, but confidence is eroding. America’s fiscal indiscipline and weaponization of sanctions have driven many to hedge. Once alternatives gain traction, reserve-currency shifts will accelerate.
China’s challenge to U.S. hegemony is formidable but not yet absolute. The U.S. still leads in advanced research, global finance, and alliances, which China is not in a race to replicate.
China’s phenomenal rise, as George Yeo, Singapore’s former Minister for Foreign Affairs described to me, is akin to a new planet that has entered the solar system, which others still find it difficult to adjust to.
Yet hegemony depends as much on credibility as on capability. America’s domestic dysfunction and inconsistent global leadership have eroded both. Many nations, especially in the Global South, now view China as a pragmatic partner offering investment without lectures. China’s BRI is now embraced by 150 countries and 30 international organizations as a vehicle of international cooperation. The world is moving toward multipolarity, where no single power sets the rules.
Civilizations rise when united by purpose, disciplined in governance, and open to innovation. They decline when they lose moral cohesion and overextend abroad while struggling at home. America stands at that inflection point. Its greatest threat is not Beijing but itself: a society divided by ideology, an economy addicted to debt, and a polity seemingly incapable of reform. As historian Arnold Toynbee observed, civilizations die not by murder but by suicide.
The U.S. has chosen a self-diagnosis that actually speeds up its isolation. Leadership is built on generosity and that has a cost.
The United States is now engaged in counterproductive diplomatic pugilism of its own, providing openings for China to play the role of reasonable partner. Both nations should remember that enduring power is built on cohesion and justice.
The world is too interconnected for any single empire to dominate in the short run. In near term, we are entering an era of shared authority — messy, regional, and multipolar. The wheel of history turns again…
