internet - Saturday, January 2, 2010 15:03 - 0 Comments

Global Power Will Shift from West To East

In today’s Welt online edition (it is in German) Niall Ferguson shares his thoughts on why the “Western World” will loose its world dominance – which it had held for 500 years – and the East, mainly China will surpass.

The major reasons for this shift are (from China’s point of view):

- China’s enormous financial resources (especially in comparison to the US),
- its ceaseless economic growth
- its human capital, its manpower

Or from the US-point of view as Ferguson points it: “A manpower deficit (not enough boots on the ground in Iraq), an attention deficit (not enough public enthusiasm for long-term occupations of conquered countries) and above all a financial deficit (not enough savings relative to investment and not enough taxation relative to public expenditure).”

Together with Moritz Schularick Ferguson coined the term “Chimerica” (China and America) in 2006 describing one of the key issues that caused the financial crises in the Western world: the fact that the US current account deficit was mostly financed by Chinese banks!

Niall Ferguson is also aware of the problems China is facing, e.g. democracy and political issues, but he concludes without any doubts that China will dominate the next decade.

Reading and thinking about the article amplifies many phrases I’ve heard in my last conversations regarding China.

P.S. Just found an english version of the article! Thanks to twitter:-)