Is Chinaâ€™s Global Economic Dominance Inevitable?written by Bella Palmer
Is the recent trade
Ian Morris’s hefty and uniquely broad history Why The West Rules – For Now argues that the history of human
He puts the current world order down to the result of factors such as climate change and historical outcomes that could conceivable have played out differently but for the variations of chance. Our international economic, political and cultural dominance is not, believes Morris, the result of anything inherently unique or ‘better’ about the West’s culture. And as such, the balance of power could and may well shift East again with China’s more autocratic and less individual socio-political model demonstrating it too has its advantages.
It would be overly simplistic to say Morris forecasts the rise of China as the new global power, overthrowing the West, currently led by the USA over the next several decades. However, he does forecast climate change and competition for resources, also strongly influenced by global warming, leading to a “global weirding”, that will see states fail and a new order rising.
Morris is a
Investors, investing online in equities and other major international financial markets, have a responsibility to themselves to anticipate the broad macro trends that will shape the future landscape their portfolios will sit in. Spotting the technology trend towards digital cameras and then smartphones would have saved investors in Kodak from losses. The company failed, unable to find a new place in a changed economy that didn’t include much demand for photographic film. Similarly, if the buying power of the Western consumer is locked into a slow decline in comparison to the Chinese consumer, it would make sense for investors to start to gradually reposition their investment portfolios towards exposure to the Chinese market.
Should you be selling shares in
There is a strong body of evidence that China’s undoubted success in evolving into a global economic powerhouse of the past four decades does not necessarily mean that process will continue to the point it inverts the West’s current dominance. It may but it may well also falter. In the 1980s a rising Japan, having reinvented itself as a technology and productivity hotbed following defeat in the Second World War, seemed on course to challenge the economic might of North America, Australia and Western Europe. In the 50s the Soviet Union, in a period of rapid economic growth, was bullish about its own prospects. In both cases the mistaken assumption was that recent periods of sustained growth would continue.
They didn’t. Yes, Japan is a major economic power to this
Independent researcher Capital Economics argues that despite the fact that despite China’s proven ability to sustain rapid economic growth and plenty of remaining potential to improve its per capita productivity, it could be on the verge of a period of painful growth deceleration. Its recent policy of huge investment in the economy, fuelled by the quick accumulation of heavy debts,
For over a decade now China has pinned its hopes on a significant rise in consumer
Many economic analysts also foresee a scenario in which the rise of robotics and AI over the next couple of decades will offer a new boost
Of course, China may defy the doubters and remain on course, sustaining economic growth at a level which would flip the axis of global dominance and a re-drawing of political and cultural norms internationally. But if bookmakers were to draw up odds based on statistical likelihood of a China-dominated world a century from now, taking all of the evidence and known factors into consideration, they would be long.
As an investor, China’s economy and the growing international influence of its biggest companies certainly represents an opportunity but it also entails a significant level of risk. India might represent an even better bet on future growth. And it would be unwise to discount the West just yet.
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