one has to wonder if china doesnt plan to appreciate their currency when the global economy slows, allowing them to become the new US in the global economy? they could replace us as the consumer ....
I often think of how the american century is unwinding before our eyes. the legitimacy of the US is questioned because of iraq and our incompetence handling basic domestic issues like katrina and home lending. our authority is dying along with the international institutions we built to excercise our influence: the world bank and imf. meanwhile, we're starting to accept european accounting standards, and we're exporting financial volatility -- less than 10 years after financial crisis in asia shook our markets.
it may seem impressive how fast the decline has occured, and how quickly the chinese have risen. but both developments were in the works for decades.
now we're approaching a series of events:
1-a possible recession in the US, but not the rest of the world. this probably hasn't happened in over a century. it would be a clear indication the US is no longer the global leader.
2-olympics in beijing: china clearly will use this as an occasion to enhance their position as a "big guy" in the world. they will increasingly position themselves as arbiters and players in big situations previously dominated by the US or other powers.
3-revaluation of the yuan. this could be the most important thing of all. ranking by purchasing power parity, the US accounts for about 20% of global GDP. china is 17-20%, depending on whose numbers you use. when china revalues, they will send a surge of money into OTHER countries.
the presence of the chinese consumer has yet to be felt in the world, where the american consumer has been dominant for decades.
the american consumer as driven the trade deficit wider as companies looked overseas for cheaper production. this has resulted in a gradual transfer of global GDP from the US to the rest of the world.
but now our trade deficit is actually shrinking.. we're becoming less of an importer. china could go from being a huge exporter to a big importer very soon. all they have to do is revalue.
this means china has the ability to quickly diplace the US as the market that drives the global economy. once they revalue and import more, they can step up and replace us as the dominant voice in the world.
for a long time, I wondered why they were so dense, and allowing their economy to overheat. but know I understand:
they know the inflation isn't bad enough to cause real problems yet. they have the olympics ahead of them... these chinese communists have played us very well diplomatically and politically. we have built them into being our equals, and now they plan to surpass us. we can be sure they will revalue in a manner that does the most to enhance their power. waiting for the US to enter recession, and then using their buying power to save the world economy would make a lot of sense. they have done everything right so far. why not expect the same this time?
the big story in coming years will be american decline. monuments will collapse, and crush victims under them... a moment of huge global change is at work right now. a shift is happening now on a metaphysical, hegelian level. it deserves reflection and respect. for next several decades, a new kind of world will emerge. there is no going back to good ol' america like we did in the 1980s -- when oil was cheap and our moral authority clear... when interest rates were falling and productivity surging...
now there is another player our size, plus others like russia, india and brazil. our supremacy is only just beginning to crumble.
for the first time in perhaps centuries, america is no longer in the ascent. I do not yet know what this means, but have to think it won't be good for our society and culture. we should look to the UK for some indications of what happened in the 1950s and 1960s as their empire disappeared.