China’s dominance shouldn’t shock the West

Gerard Baker in The Times,

24 November 2018

The ‘Middle Kingdom’ reigned supreme in the global economy for 18 centuries. Normal service is being resumed

Thanksgiving, celebrated across the United States today, not only offers an opportunity for Americans to fall out anew with family and indulge in some national culinary exceptionalism (sweet potatoes with marshmallows is high on my list of America’s many crimes against the palate).

It also serves to reconnect the country with its foundational legends, commemorating the moment the pilgrims sat down with the Native Americans in a mutual expression of existential gratitude: the immigrants thankful they hadn’t perished in the crossing from the old continent; the local tribes grateful they hadn’t (yet) been wiped out by the new arrivals’ weapons or germs.

The annual celebration of that first Thanksgiving, estimated to have been in 1621, is also a reminder of how young the country is. America was barren wilderness when Europe was well into its third millennium of civilisational development.

Even two hundred years after that first feast it was a nation in embryo, barely a generation old, clinging to a foothold on an unknown continent, eclipsed in wealth and power by Europe and Asia. One hundred years later — just a century ago — it was still far from certain that America would ever lay claim to the kind of influence that the British, Austrian, Russian and Ottoman empires had for centuries.

Yet today American global pre-eminence has become a fact of life. The span of our historical awareness is so short that the rise of challengers such as China or India seems shockingly modern. The idea that the 21st century may be the Asian century, as the 20th was America’s or the 19th Europe’s, is seen as a dramatic break with history. But it’s worth reminding ourselves that in some ways history’s clock is cyclical rather than linear.

In the longer view, America’s — and before that Europe’s — dominance may come to be seen as a short aberration and the rise of China and other Asian nations as simply a reversion to the natural order of things. That at least is the key point of a provocatively titled book, Has the West Lost It?, by Kishore Mahbubani, a Singaporean academic and former diplomat. As many in America and Europe contemplate the dramatic changes to their world in the past few years, it’s been getting a lot of attention.

From the birth of Christ until 1820, Mahbubani points out, China and India accounted for the lion’s share of global economic output. It’s only in the two centuries since the Napoleonic wars that Europe, and then Europe and America combined, have eclipsed the East.

Now the trend is firmly in reverse and the speed of the turnaround is striking. In the middle of the last century the US and Europe accounted for about 50 per cent of world GDP. They are now around 40 per cent and falling. And consider this testament to China’s decline and rise. Three hundred years ago the “Middle Kingdom”, as it was known, accounted for about one third of global economic output. The objective of the current leadership in Beijing is to mark the centenary of the founding of the People’s Republic in 1949 by restoring the country’s global economic share to one third. That would make China’s economy twice the size of America’s.

Of course there’s nothing inevitable about these rising and declining fortunes. While China and India account for almost 40 per cent of the world’s population there’s no iron law saying that sheer size of population will determine the strength of an economy. So what’s been happening?

In Mahbubani’s view the answer is twofold: first the Asian economies have learnt from the West’s success in the past 200 years and adopted and then adapted the key characteristics. The fount of this success is the triumph of reason. The Enlightenment that began in the late 17th century demolished scientific frontiers and allowed the West to leap ahead of the East, which was still constrained by religious thought and practice. But in the past 50 years especially, the fruits of the Enlightenment have been spread in Asia and cultivated an economic and psychological revolution that first lifted country after country out of poverty and then enhanced their growth to the status of fully developed economies. This was the widespread adoption of capitalism, with regional, national and ideological characteristics.

Second, and more or less simultaneously, Mahbubani argues, the West has squandered its advantages through a series of strategic mistakes. Most of these have occurred since the end of the Cold War; overreach in places such as Iraq and Afghanistan, financial excesses and a failure to absorb the costs and benefits of globalisation.

This part of the argument is incomplete. No doubt strategic mistakes have been made in the West but it’s also clear that in the past 20 years the US and Europe have lost pace in economic dynamism. That may be the result of an overweening state or internal divisions or perhaps — as the nationalists and populists claim — insufficient attention to national interest and too much to policies that benefit other nations.

The rise of “the rest” doesn’t have to be a zero-sum exercise, of course. But if China does achieve economic hegemony and chooses to exercise it as the West has, there’s a compelling need for the rest to get competitive again quickly.

About Robert Stewart

Robert S. Stewart is a Canadian/Swiss entrepreneur, financier, investor, Master Planner, explorer, scientist, adventurer, athlete, Corporate Director, Chairman and CEO of numerous global enterprises including those in mining, petroleum, infrastructure, telecoms, aviation, hospitality and medical research . Currently, he has invested in the construction of the world's first integrated cacao plantation (103 hectares), chocolate processing factory in Costa Rica. Cacao beans are normally sold into the world market and processed into chocolate in the Northern Hemisphere, far from the planters and plantations of the Tropical zone where they grow. Modern, industrial chocolate has had the bitter mass from poor quality beans provided by 95% of Forestero beans removed from them and replaced by massive amounts of white beet sugar, soya and other additives. Criollo and Triniterio beans from Central America are the best beans in the world, where they first grew 4000 years ago. Adding value and paying the workers adequate salaries and prices for their high quality beans will lift them and Third World economies out of poverty. He created the World Ocean Corporation to clean-up plastics, toxic chemicals, municipal and industrial waste; replenish decimated fish stocks in the Mediterranean Sea, North Sea, Pacific, Atlantic, Indian and Arctic Oceans; and to build protection and exclusion zones for reproducing fish, mammal, animal and aviary species found in the oceans covering 71% of the Earth's surface. He writes frequently in the OP ED pages of the New York Times, Financial Times of London, The Economist, Toronto Globe and Mail,, The Times and Telegraph of London, Winnipeg Free Press and the Victoria Beach Herald. These are reprints of his editorial and OP ED pieces and comments on those who write better articles than his own. While he uses his own name or Email address to identify the writer of his articles, occasionally he is forced to use a "nom de plume" by the editors. "Beaverbrook" passes for that, after three generations of family dogs of the same name. It's a dog's world.
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