In the economic and political fields, Asia and particularly China are becoming a rival power centre to the US. |
In an earlier article (Business Standard, February 10, 2006), I had argued that the US is showing many of the symptoms of "The Decline and Fall of Great Powers" as argued by Paul Kennedy. It is worth pondering whether economic and, indeed, political power has/is in the process of being transferred across the Pacific, to Asia, in general, and China, in particular. (Americans themselves seem to agree""a large majority has consistently said in polls that their country is going down.) If so, this would mean that the pendulum has once again shifted towards the west. In the 18th and 19th centuries, it was imperial Europe, particularly Britain, France and Germany, which was the dominant military, economic and industrial power, which was also at the cutting age of research. The 20th century witnessed much of this leadership being transferred across the Atlantic to the United States""not that Europe declined in economic well-being. For more than a quarter century after the end of the Second World War, the Soviet Union tried to compete in military and political power with the United States, also advocating a different economic model. It imploded in the late 1980s, leaving the United States as the sole super power. Various developments suggest that in the economic and political fields, though not in military power, Asia and particularly China are becoming a rival power centre. |
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There have been many false alarms about the US's decline as an economic power""OPEC in the 1970s and Japan in the 1980s were supposed to "buy" the US economy. And, there are pitfalls which could derail the Chinese juggernaut:
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Of these, the first two are probably the more immediate threats. Bilaterally, the US and China have not succeeded in reaching an agreement on the exchange rate and the trade surplus/deficit. Will they do any better with the help of an "intellectual honest broker" (Martin Wolf, Financial Times), the International Monetary Fund? It is a $64 billion question even if one hypothesises the IMF's intellectual honesty. Tailpiece: In his article "The year of Asia?" in this paper (March 29, 2006) Suman Bery argued: "Economically, developing Asia has been floating on the sea of liquidity unleashed by the US Federal Reserve and the Bank of Japan. This has been a major factor boosting growth in the region, and has helped in the rescue and repair of financial systems throughout the region." This seems to create an impression that the growth in Asia is due substantially to monetary policies elsewhere, and only peripherally to the domestic policy and environment in Asian countries. To my mind, the latter need to be given far more credit than the former""else, why the difference between, say, much of Africa and much of Asia? To be sure, Asians being large exporters and therefore registering surpluses on the current account is nothing new. The East India Company, for a long time, had to pay for its purchases in gold""since Asia had little to purchase from Europe. At that time, Asia was accumulating gold; now it is dollars!
avrco@vsnl.com |
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