Gideon Rachman has a column in yesterday's FT in which he suggests that the recent US economic troubles may signal a shift in global political power, though perhaps not as quickly as one may think. Citing Pan Wei, director of the Center for Chinese and Global Affairs at Beijing University, Rachman captures the Chinese sentiment:
"My belief is that in 20 years we will look the Americans straight in the eye – as equals. But maybe it will come sooner than that. Their system is in chaos and they need our money to rescue them."
Yet according to Rachman there are three key reasons why this reality may not be so quick to materialize:
- Even if the American market is no longer the be-all-and-end-all for China and India, it is still extremely important.
- The Chinese economic engine has already been sputtering, for other reasons. In Beijing and Shanghai, the price of smart apartments has been falling sharply, and the Shanghai stock exchange is down 60% over the past year.
- The fact that American consumption is falling for the first time in eighteen years inevitably means that China will grow more slowly in the coming year
And, with today's drop in Asian stocks, the global shift surmised by Pan Wei seems less likely.