The power shift to the East: The 'American Century' is ending
(Continued. read Part III of the article here)
The world economic landscape is rapidly changing and a very different world is emerging. It is perhaps too early to tell whether the US and the EU will head down toward geopolitical rivalry, but the warning signs are certainly present. The rise of euro and the resulting competition with the American dollar will have geopolitical consequences. In the near future, the US and Europe are likely to engage in more intense competition over global trade and finance. A more assertive and dynamic Europe and a less competitive American economy do make it likely that trade disputes will become more politicised.
None of these political-economic trends could plausibly lead to armed conflict between the US and Europe, of course. But any one of them could result in a dramatically different world than the one we live in today.
In 20 years time, however, by 2025, America and Europe may both be spending much more time worrying about the rise of Asia than about each other. Even without a collapse of the dollar hegemony, there seems to be satisfactory evidence for a great and rapid shift of wealth and power to China and India. Currently, the economic power of China and India is growing at three to five times the GDP rate of Western states. The transfer of power from the West to the East is gathering pace since the late 1990s, and Washington think-tanks have been publishing thick white papers charting Asia's, and China's in particular, rapid progress in microelectronics, nanotech, and aerospace, and printing gloomy scenarios about what it means for America's global leadership. The American administration considers China as a potential 'strategic competitor' and has exerted enormous pressure on it since the early 1990s. One flash point with the US is China's fast growing demands for oil. China was the world's second largest consumer of petroleum products in 2004, having surpassed Japan for the first time in 2003, with total demand of 6.5 million barrels per day (bbl/d). China's oil demand is projected by EIA to reach 14.2 million bbl/d by 2025, with net imports of 10.9 million bbl/d.
The opening up of China's economy to global forces was part of US Cold War policy, with the intention of reaching a rapprochement with Mao Zedong in the 1970s against the Soviet bloc. How ironic that now, three decades later, the US increasingly regards a fast expanding market economy in China as a serious threat to US global hegemony. The uncertainty of the US economy and the decline of US technological leadership indicate that the time has come for the US to rethink its strategic economic options. All this may soon dramatically change the context for dealing with global economic challenges.
Today, China is growing with bewildering speed and is the most obvious power on the rise to the economic superpower status. But it is not alone. India and other Asian states now boast growth rates that could outstrip those of major Western countries for decades to come. China is currently the world's sixth largest economy with an annual economic growth of more than nine percent. India's annual growth rate is eight percent. China's economy is expected to overtake France and Britain this year, be double the size of Germany's by 2010, and to overtake Japan's, currently the world's second largest, by 2020. Due to its one-child policy, China's working-age population will peak at 1 billion in 2015 and then shrink steadily. India has nearly 500 million people under age 19 and higher fertility rates. By mid-century, India is expected to have 1.6 billion people - and 220 million more workers than China. Of course, this could be a source for instability. But a great advantage for growth if the government can provide education and opportunity for India's masses. The experience of the last 10 years provides more optimism than problems for India in near future.
China has become the engine driving the recovery of other Asian economies from the setbacks of the 1990s. Japan, for example, has become the largest beneficiary of China's economic growth, and its leading economic indicators have improved as a result. Thanks to increased exports to China, Japan is finally emerging from a decade of economic crisis.
By the year 2020, the U.S. National Intelligence Council (NIC) predicts, China will be an economic powerhouse, vying with the United States for global supremacy. Mapping the Global Future: Report of the National Intelligence Council's 2020 Project, one of the council's recent key reports in 2004 on the status of the world, says China's economic growth, expanding military capabilities, and large population will guarantee its success. 'In the same way that commentators refer to the 1900s as the "American Century", the 21st century may be seen as the time when ... China ... comes into its own', the council wrote. The report comments as 'the world of 2020 will differ markedly from the world of 2004, and in the intervening years the United States will face major international challenges that differ significantly from those we face today.'
