Let's get to a develop now -- a development now that could threaten this country's status as the world's preeminent economic superpower. According to new figures released today, China is now poised to overtake Japan as the world's second largest economy, behind the United States. Analysts say eventually, it could push the U.S. out of the number one spot. But that will still take many years.
Let's talk about the implications with our senior political analyst, David Gergen.
What does it immediately mean to you, David, if China now is about to pass Japan as the number two economic superpower?
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST, FORMER PRESIDENTIAL ADVISER: Wolf, I think many historians may look back upon the rise of China and the shift of influence to Asia from the West as the most important development of our era. And I think we're all still trying to come to grips with it. It means, on one hand, good things. The -- the expansion of a Chinese economy means there is a much bigger market. There are many more people there who can buy American goods. All of us can -- can grow and prosper if it goes well.
But it's a two-edged sword, isn't it?
The threat -- there are two threats to the United States. One is economic, that as China grows, it will also suck jobs out of the United States. And we're seeing a lot of that right now.
And the second is the military threat. China's economy is likely to pass the United States, according to the lead economist at Goldman Sachs, in 17 years. That's not far away.
And what we know from history is that when a nation becomes number one economically, it often becomes number one militarily, too.
BLITZER: And the military ramifications could be significant. I'll get to that in a moment.
I was just in South Africa. Throughout the entire continent of Africa, everyone is saying, you know, the Chinese are here, they're doing this, they're doing that, they're buying up all sorts of stuff. The United States is trying to get involved right now, but it might be late, they say, because the Chinese investors are all over the place.
Is the U.S. entering this global market a little bit too late right now?
GERGEN: I think the U.S. is entering the global market too slowly. And, you know, we're -- we -- Andy Grove, the co-founder of Intel, recently pointed out that we -- we're doing very well with -- we creating start-ups in this country. But once we do the start-ups, increasingly, when they scale up, the jobs go overseas to Asia, especially to China and India. And that we're losing jobs as a result. We're losing our manufacturing core, as a result. And we really have to -- and it's one of the reasons so many people are hurting in this company -- country today.
So we -- you know, it's a long time ago, Wolf, but it was a famous saying by Napoleon, "Let China sleep.
When she awakes, the world will be sorry."
BLITZER: Yes. So we...
GERGEN: I hope not, but it...
BLITZER: So...
GERGEN: -- but we have to -- it's sobering.
BLITZER: So -- so the military ramifications for the U.S. are what?
GERGEN: The military ramifications are that -- that if China becomes a rival to the United States militarily, right now it wants to protect the world order. And, in fact, it appreciates the fact that America is trying to help keep order. But the day may come when it has enough military power that it will become an expansive power. It's already, you know, there are already disputes about islands out in the Pacific. There are going to be increasing disputes over Taiwan, if we're not careful. And they could begin to, you know, throw their weight around and really begin to assert themselves. And -- and already we're seeing country after country is increasingly looking to China as the future and America as the past.
The 20th century was the American century. If the 21st century becomes the Chinese century, it's going to threaten us.
There's a -- I'll just say one final thing. There is a new book by Michael Mandelbaum. He's a professor at John Hopkins -- called "A Frugal Superpower." And it's about America with -- with all the debts we have and the entitlement programs expanding rapidly, that he believes that we're inevitably going to have to pull back as a superpower, our military operations overseas -- our willingness to do things overseas, that's going to leave a vacuum. And -- and China could easily fulfill that vacuum. And it could threaten us. It's extremely important, I think, in coming years, the United States stay competitive and that we try to work with China to make sure it's a cooperative relationship.
BLITZER: We still have a much bigger economy than they have, but they're narrowing the gap dramatically. I think our economy is about $50 trillion. Theirs is $5 trillion. But they're working up quickly.
GERGEN: That's right.
BLITZER: All right, thanks very much.
GERGEN: You know, Wolf, only -- the only...
BLITZER: Go ahead.
GERGEN: Thank you.
BLITZER: What -- make your final point.
GERGEN: No, I was going to say, only a decade ago -- only a decade ago, they were the sixth largest in the world. Now they're second.
BLITZER: Yes.
GERGEN: And they're moving up fast. And they're growing 10 percent a year. And here we're just sort of, you know, going sideways.
BLITZER: Yes.
GERGEN: And it's really important that we get our economy moving again.
BLITZER: David, thank you.
Transcript from CNN's The Situation Room aired August 16, 2010