Sixteen of the fastest growing countries in the world are in Africa. No you didn’t get it wrong. Seven are in South East Asia followed by three in Central Asia. So has Africa’s time finally come and the continent will now forge ahead?
Ethiopia is predicted to grow at least 8% per annum for the next few years. If so, it will be as normal for Eleni Gabre-Madhin, CEO of the Ethiopia Commodity Exchange, to take center stage globally as for her Western and Asian counterparts.
According to the IMF we will see more African countries with massive growth during the next few years. They also forecast that many African economies will outpace Asian countries, even China and India.
The shoe is on the other foot
Angola is now lending money to it’s former colonial master Portugal struggling in the Euro crisis. Not so long ago nobody would have thought such a development possible.
Many of us have worked extensively to further the interests of Africa and hence hope real progress has now started. But somehow can’t help wondering what will go wrong this time because something usually does. Really hope it is correct that Africa as a whole will grow 7% on a yearly basis over the next two decades?
Surging demand for raw materials and foreign investment driving progres
The continents changing fortunes seems to be, at least partly, based on China’s demand for raw materials, higher commodities prices and increased inflow of foreign investment. Africa’s rising middle class have also fuelled growth in domestic demand. There is global interdependence in respect of production and demand. Africa offers producers around the world a vast and growing market that will keep on expanding.
African governments improving
Government is improving in Africa and corruption is less than it used to be. Seems the NEPAD peer review mechanism have made a difference when it comes to implementing true democracy, good corporate governance, transparency and eradicate corruption. Nowhere else in the world has such a process ever taken place and its uniqueness was well illustrated by former President Bush’s remark, “We don’t do that in America”. More and more governments are being responsible and putting money aside to cushion their economies. Know-how is also improving. As a result of statisticians improving their data in Ghana their GDP was revised up by as much as 75%.
Trade not aid
Africa, the poorest continent, according to many analysts, bares the brunt of the continued rigging of trade rules in the WTO. And in order to prosper the continent needs to trade out of poverty, as opposed to relying on aid. According to the UN, just one percent of increase in exports from Africa is worth a staggering five times the amount it receives in aid and debt relief.
Africans recognises their responsibility to wipe out the gap between the continent and the rest of the world. Africa wants to improve its role in the world economy. Its contribution to world trade is hopelessly small. They want to get its house in order, but the rest of the world needs to play its part as well. For example, Africa is told it may not subsidise its agriculture, so the Western world shouldn’t be doing so either, but as we know both the EU and US does. Jean Chretien put it very well when he stated “we must realize that little progress will be made with investments and trade if Africans continue to be refused access to our markets”.
African media has a role to play
Can’t help thinking about what President Chissano told me in 2004. According to him a major obstacle to improving the image of Africa is that the African press, like it’s Western counterparts, focus on scandals to grab headlines. Naturally a free press is essential, but the down side of that is that far too many negative stories come out of Africa, deter foreign investors and hence have a detrimental affect on the progress of the continent. Maybe it would be a good idea for African media to also show case African success stories? That Angola is growing faster than China would be a start.
The world’s new manufacturing centre?
Unfortunately commodity driven growth doesn’t generate enough jobs. However, now with salaries increasing in Asia Africa could become the new manufacturing centre. Kenya and Uganda have already increased their export sector. To make this reality the WTO need to facilitate market access for products made in Africa on the world market. If not, Africa may continue to be a scar on the the conscience of the West.
There are many obstacles to Africa continuing to progress. Political instability, weak rule of law, corruption, bad infrastructure as well as poor health and education. So without the political will to reform, the current growth rate will be difficult to sustain. However, for outside companies looking for new markets a whole continent almost sounds too good to be true. But that’s what a developing Africa, with a gradually burgeoning middle class and numbers of skilled workers constantly increasing would constitute. A vast and growing market for the world’s manufactured products, intermediate goods and services. Add to that UN figures showing that investments in Africa provide higher rates of return than anywhere else in the world. It has been said for more than a decade that Africa’s time has come. But maybe now with the changed world order due to the recent global crisis, will Africa finally be able to progress? What do you believe? Will Africa now be able to forge ahead or will the gap between Africa and the rest of the world remain as wide as it is?
European Union leaders are now advocating “More Europe” as a solution to the Euro Crisis. Watch Harvard professor Niall Ferguson explain to The World Economic Forum what a more integrated Europe would entail:
Those pro “More Europe” fail to acknowledge that any federal system implies a transfer of resources from the more efficient and productive core to the periphery.
For well performing countries like Germany a federal Europe would be expensive. According to Ferguson, it would cost the Germans up to 8% of GDP per annum for the foreseeable future. And with the very real possibility of a full-blown European banking crises as a result of a trigger, say a Greek default, is a federal Europe really a good idea?
Seems to me it’s time to start having a fresh look at the problems facing Europe. What’s been done so far isn’t working and it’s highly unlikely that giving more powers to Brussels would do the trick. Contrary to Ferguson’s belief however, there is massive discontent with the EU in Western Europe. Doubt that governments in that part of Europe will be re-elected if they cede more power to Brussels.
The unpredictablility of economics
In 2008 Queen Elizabeth asked top economists at the London School of Economics what caused the economic crisis. And they could not give her an answer. With hindsight we can patch together what happened and the domino effect that ensued. But until events unfolded nobody was certain what would happen. Six month later the British Monarch received a reply from British economist Thomas Palley stating that economists have become increasingly arrogant, narrow minded and unable to innovate.
We can now also conclude that it would probably have been better for the world if Hank Paulson had saved Lehman Brothers, like Warren Buffett suggested. But Paulson, presumably, didn’t understand what Lehman’s bankruptcy would cause and hence refused to do so. Or, as some believe, deliberately exported a US problem to the rest of the world.
The unpredictability of economics is a major problem because most available tools take time to come into effect. By the time they do, the economic landscape may have changed. Even if everybody agrees that solution x is the best way forward they could all turn out to be wrong.
Testing if a crisis can be solved by austerity
At the moment European politicians are for the first time in modern history testing if austerity can fix an economic crisis. It was tried, for instance, in the 1840s and failed. And it looks as if it will fail again. Austerity is unfortunately having a negative impact on growth and development in Europe. People and governments are not spending, which is fatal and goes against the economic health desired.
How about parallel currencies?
Professor Dirk Meyer, an economist based in Germany, has come up with an innovative solution to the financial problems facing Europe.
He rightly states that despite the fact that the Euro is presently causing huge economic problems, it is politically and economically a good idea. Consequently Meyer believes the way forward is to keep the Euro and, at the same time, bring back national currencies.
It’s the best solution to Europe’s problems I have so far come across. And it is my hope that EU leaders are seriously evaluating that option. You may beat them to it by having a look at his ideas in “Bring back Deutsche Marks! (Euros can stay)”. It could enable Europe to have the cake and eat it. Why does it have to be either or? With economies as diverse as say, Germany and Greece, having parallel currencies could very well be the way forward.
Do you believe a federal Europe is a good idea? Will it solve Europe’s current economic problems? Would having parallet currencies work? Is it likely there will be another Lehman trigger in the future? If so, would a federal Europe be more vulnerable or protected? Or maybe you are of the opinion that the current austerity programs will sort out Europe’s problems? Wen Jiabao said to EU leaders recently: “China will continue to invest in European government bonds and bonds issued by the European Financial Stability Facility”. So if the EU proceed with current policies Europe will, like the United States, end up heavily indebted to the Chinese government.
Is the centre of global finance gradually moving from Wall Street to China? Goldman's vice chairman Mark Schwartz has been sent to Beijing, the new battleground for foreign banks. China is dominating Asia IPOs and the street has decided that's where the money is. Devote 3 minutes to watching Breakingviews' Wayne Arnold and Wei Gu talk about why the focus is moving to Beijing:
When it comes to capital markets Chins today is where the US was in the late 70s. For anyone, apart from multinational companies, to raise capital is almost impossible. But then came the 80s and suddenly virtually all US companies could. China is now going through a similar transition. So for international banks being downgraded by rating agencies, such as Moody's, the timing is perfect for moving in.
China opening up its financial markets
It started in April this year when China increased the amount of money that international fund managers can invest in China to $80bn i.e. almost tripled it.
Beijing wants to increase investment and competition in its financial and banking sector. Opening up its financial markets is a way for Beijing to build up the yuan as an alternative to the US dollar as a global reserve currency.
Wall Street swiftly moved in
Question is how will Wall Street's presence affect China? Will the Chinese allow the kind of new innovative financial products that Wall Street come up with on a regular basis? Is it even possible that China will be the new centre for dealing in risky financial products that could be regulated in the West? Maybe the Chinese market will be more tightly regulated when it comes to protecting China as opposed to the rest of the world?
Can China, once again, re-write the rules of competing in the global economy? Will the centre of finance gradually move from New York to China? The same investment banks may still dominate and set the trends, but their branches, or head offices, in China will be in charge?
Will China avoid making the same mistakes Japan did when building a capital market? How will China's equity, bonds and derivatives markets evolve? Is the investor mix in China changing? How will new financial products be received? Will the yuan emerge as a global reserve currency? Do you believe the centre of the world of finance will long term be in China instaed of New York?
Innovation is the name of the game and applies not only to businesses but espionage as well. Gone are the days when 007 was sent to sort out Blofeld. Bond is about to be made redundant and most of his work will be done online. Devote 2 minutes to watching a cyber security expert explain the workings of espionage program Flame that is targeting governments and businesses in the Middle East:
Iran and Israel/Palestine have been the main targets which have made experts all over the world believe that America and/or Israel is behind it.
The New York Times have looked into Struxnet and Olympic Games (the code name given to it already by the Bush White House) for 18 months. According to their article, Struxnet suddenly started spreading into computers outside the Iranian nuclear plant and the Americans believed the Israelis had done something to enable that. Maybe that was the beginning of Flame? If so, it wouldn't surprise me if the hackers that work for Israel's Unit 8200, that I wrote about in Cyber Warfare – Hackers to the rescue, were behind it. Maybe it's time to make "hacker" a profession and enable more of them to use their skills in positive ways to protect governments and businesses against this kind of attacks, instead of in destructive ways?
Imagine a virus that can delay exports
Flame not only steals information but is also said to have disrupted oil exports by shutting down Iranian oil terminals. But then again, Struxnet destroyed some of Iran's nuclear centrifuges.
Can't help wondering if some other nation could be behind Flame? The Chinese government is actually known for their cyber activities and so is Russia and Iran. But according to the above mentioned article in The New York Times, the era of viruses such as Flame started when George W. Bush was president. Having falsely accused Iraq of having weapons of mass destruction he had no credibility for, again, accusing a country of nuclear ambitions. And the Iranians knew it. So when Bush was presented with the opinion of cyber warfare he found the sophisticated cyber weapon too good to resist. Obama followed suit and in fact speeded up cyber attacks against the Iranians.
Just read an article in in Foreign Policy Magazineasking if there are US special ops inside North Korea. Maybe to find the information needed to get Flame into places of interest in Pyongyang? If so, in the future Flame and its successors may take care of espionage in North Korea as well. The new cyber spy tool sounds to me not only to be up to the task but able to penetrate where ops cannot thread.
The beginning of a new era
Seems to me that using viruses like Flame is the way of the future for espionage. Catch is, all nations will follow suit, if they haven't already. And that includes Iran and North Korea. In fact, how long will it take before Iran pays the US and Israel back for Struxnet? It's essential for all countries in the world to boost their ability to withstand such attacks. And the same applies to businesses who may otherwise have their secrets stolen and their markets taken away.
Do you believe viruses such as Flame is the way of the future? Should all countries and businesses increase their ability to withstand such attacks?Are the US and/or Israel behind Flame? Will the number of James Bonds in the world be gradually reduced? Catch is the Blofelds of this world neither are, not will be, in decline. Should hacking be made a profession in order to benefit from their skills? Is privacy gradually becoming a thing of the past? Will we all have to get used to a world where everything is seen and heard? If so, will the 007s or Blofelds be the winners? Or maybe the Bond Girls? If so, hopefully the good flames that end up with Bond in the end. The current Flame beats most honey traps, after all.
Even in the West, inequality and poverty are on the rise. Poverty has, in fact, reached the levels of 1933. Devote 4 minutes to watching Thomas Pogge, professor of Yale University, talking about the current international system that allows a large part of the world's population to live in abject poverty:
The global economic downturn has been pushing millions of people into poverty, or worse, extreme poverty. Add to that the fact that people all over the world are moving into urban areas to seek their fortune and we have a danger of slums increasing tremendously.
How do we keep them safe in urban areas?
There hence is a huge need to reduce vulnerability in urban settings. Half the world's people now live in cities, a share that will rise to 70 percent by 2050.
So what are we going to do to give more people in the world a decent life? If we don't do anything the amount of people living in shantytowns will rise, everywhere. Or call them homeless, if you wish.
Extreme poverty leads to crime – or worse
Countries with a lot of poverty easily gets trapped in crime or worse, become failed states. And I don't need to tell you how easily failed states can follow in the steps of Afghanistan and Somalia, do I? So it's in the interest of all of us to start eradicating poverty in the world.
And let's not forget poverty in the developed world
Frankly find it unbelievable that child poverty is on the increase even in a country like Sweden. So is poverty in all age groups, for that matter. And the same applies to Europe as a whole and the United States. Like South Koreans a decade ago, people are starting to committ suicide in Europe due to being wiped out financially. Isn't it, like Thomas Pogge put it, a crime against humanity?
Isn't it time to put Milton Friedmans theories on the shelf and, again, start implementing what Keynes ordered? Or do we really want a world where poverty is increasing and the middle classes are in decline? By now we know the side effects of Friedman's ideas as mentioned in do you concur with Joseph Stiglitz on market fundamentalism? Just look at what has happened the last few decades in Latin America, Africa, Asia and Russia. And since 2007 the American middle class has been severely affected by the same side effects of his policies. The Euro zone is currently being hit which has an impact on Europe as a whole. China has been spared to some extent since it implemented Friedman's ideas but never completely opened up their markets. And Iraq failed miserably because the shock theraphies implemented there went too far.
Negative for much of the world's population
One hundred faculty members at University of Chicago wrote a letter of protest when university president Robert ZImmer announced the creation of a $200m Milton Friedman Institute stating that "The effects of the neoliberal global order … strongly buttressed by the Chicago School of Economics, have by no means been unequivocally positive. Many would argue that they have been negative for much of the world's population." Since the time when Reagan was president the Chicago boys have dominated not only Washington but the world, not least through the IMF. So now when the recession keeps on causing substantial increases in misery isn't it time to stop implementing policies that favour multinational companies at the expense of the majority of people in the world?
Do you agree with Pogge that many of the people who support the current international system are like passive Germans during the Nazi era? Do we really want the world's middle classes and poor to be worse off? Is it really a good idea to have more people across the globe living in shantytowns? Or being homeless? No wonder Occupy Wall Street swiftly spread to 1,500 cities all over the world. Is it the beginning of a new era where 99% of the world's population say enough is enough and demand to get a share of what now goes to the top one percent? Is equality only justified if it benefits all human beings? What's your opinion? Is it time to put market fundamentalism aside and start stimulating economies in order to grow again and give more people a decent life? The Euro zone would make a good start. Or are you of the opinion that Friedman's version of capitalism is the way forward?
America's global supremacy is over, according to Brzesinski but he adds that the US still has an extremely important twin role to play. Watch him tell Chrystia Freeland why Vladimir Putin's election will reverse political evolution in Russia and how the US should handle Syria:
Few individuals have had as much influence as Brzezinski when it comes to shaping US global policy and hence the world today. Since Jimmy Carter was president the ideas outlined in his book "The Grand Chessboard" have been like a bible for US administrations.
One nation can no longer dominate the world
The days when one nation, or even one region could dominate the world the way Rome did 2,000 years ago, the Ottoman empire 500 years ago or the British empire a century ago, are, according to long-time national security expert Zbigniew Brzezinski, over. It's simply no longer possible.
Americans have to get used to sharing power
"The world is now much more diversified", he says. "There is a new east in Asia and a global population that is awakened politically". "America have to get used to the new world, in which their relative influence may decline"
He firmly believes a strong West is needed as a counterbalance to rising developing nations. The US should, in his opinion act as "promoter and guarantor of a greater and broader West".
Enlarge the sphere of capitalist democratic nations
America should, according to Brezezinski, take a lead in enlarging the sphere of capitalist, democratic nations in North America and Europe by integrating Turkey and Russia.
Avoid conflicts with China and Iran
Brezezinski believes it is crucial that America understands that it needs to avoid conflicts with China. "We have to accept their economic and political rise and that there is nothing the US can do to stop it".
US role in Asia is, in his opinion, as a "balancer and conciliator between major powers in Asia". America should learn from Britain in the 19th century when it stood aloof from conflicts in Europe and just tried to mediate. Instead of entering into a formal alliance against any major power in Asia i.e. China, Japan, India and South Korea, the US aim should be to mitigate conflict and promote cooperation and conciliation.
Western military action against Iran would in his opinion be seen as external intrusion and a cause for war in the Middle East and should hence be avoided.
Do you agree with Brzezinski that America will no longer be the one and only super power? Should the US take a lead in developing a greater and broader West by integration Russia and Turkey? Should America mediate between Asian powers and avoid military action against Iran? Should the US listen to Turkey and Saudi Arabia when it comes to handling Syria? Or maybe you are of the opinion that he is wrong and America will remain the one and only super power?
Middle class spending is crucial for economic growth. So now, with Western middle classes in debt and distress, many economists look to the new emerging-market middle class as the foundation for a new era of global prosperity. However, companies need new approaches to penetrate the developing world’s increasingly prosperous consumer markets.
The last couple of years 70 million people in developing countries joined the middle class, with incomes between $6,000 and$30,000. It is estimated that within 20 years they will surpass their Western pears when it comes to global spending power. The focus is mainly on Asia and it is estimated that in about a decade they will pick up the slack left by overspent America. Emergency market spending is in fact already bolstering the balance sheets of many Western firms.
World focusing on China and India
Needless to say the world is focusing on China and India due to its huge populations as well as rapidly rising economies and middle classes. Correct if you look at the amount of people. But by looking at the issue that way we overlook a very potent and prosperous group of people. Saudi Arabia's retail sector is actually predicted to grow by $50bn by 2014 as more international brands look to move into the kingdom that has overtaken better known retail destinations like Hong Kong, Russia and Japan when it comes to attracting brands. Only London and Dubai are attracting more retailers and shoppers.
Don't forget Saudi Arabia and the Gulf states
When it comes to per capita spending I'm certain that the middle classes in Saudi Arabia and the other Gulf countries not only earn more but also spend far more than their Asian counterparts. It's not for nothing many middle class Indians chose to work in the Gulf, despite the fact that they are paid less than the locals. Salaries are higher and you pay no income tax in the Gulf.
Shopping for entertainment
Shopping is a top leisure activity and when the weekend starts the malls are filled with people who literally shop until they drop. A woman who works in a Chanel shop in the area told me an average customer spends an absolute fortune every time they come to the shop. And the same goes for more expensive items like cars, jewellery and electronics. Considering the importance the Chinese put on saving money, I would be very surprised if middle class people in China, with the exception of some mega rich, spend that much.
Richard Branson and Martha Stewart eyes Middle East expansion
The world, certainly multinationals, are already managing the economic spending shift to Asia very well. But quite a few Western companies are forgetting about Saudi Arabia and the Gulf, which in my opinion could prove costly especially for companies selling expensive consumer goods.
So it comes as no surprise thatVirgin Mobile boss Sir Richard Branson and Qatar Telecom (Qtel) are expanding their partnership and eyeing a number of new markets in the Middle East. And US lifestyle guru Martha Stewart is extending her magazine publishing empire into the Middle East with the launch of several of her namesake titles in countries across the region
A large amount of Asian and Middle Eastern households have incomes today that position them just below the global middle class threshold and so increasingly large numbers of them are expected to become middle class in the next ten years.
Emerging middle classes have different tastes
Emerging-market leaders know that the Western system created the worldwide boom of the last quarter century that ended when Lehman Brothers collapsed. Now the boom has moved to emerging markets, and their leaders will increasingly choose to alter Western models to suit their countries. Consequently the fact that all eyes are on Asia and the Gulf is forgotten could turn out to be a fatal mistake. The new emerging middle classes are supporters of globalization but highly nationalistic. And there is a vast difference between nationalism in China and, say, Kuwait.
Kingdom to invest $100b in transport and logistics
And not only is KSA and the Gulf a key market for consumer brands. All other products and services will find that what they have to offer is in high demand. Saudi Arabia is, for instance, targeting $100 billion of investment in port, airport, rail, road and logistics centre projects over the next decade in a push to make the kingdom one of the world’s leading transport and logistics hubs by 2020.
Back to emerging middle classes in general, we can conclude that the Chinese bought more cars than Americans last couple of years, and that India has as many Internet users as the U.S. Also it is estimated that by 2030, more than nine out of every 10 mobile phones will be owned by people in the developing world. Coca-Cola actually forecasts a doubling of worldwide revenues to $200 billion over the next decade, thanks to another 1 billion people expected to join the middle class by 2020. So Western companies who haven't yet focused on developing countries' middle classes should jump on the band waggon swiftly and not overlook the Gulf.
The prospect of war with Iran is headline news. But how prepared are we for cyber threats? Or worse, the prospect of cyber space turning into a nuke? Devote four minutes to listen to what a high level delegation from Europol, Israel, NATO, the EU and US has to say on cyber security:
According to a new report on cybersecurity by Security & Defence Agenda, a think tank in Brussels, Sweden, Finland and Israel are best prepared for cyber attacks. Better even than the United States, Germany and Britain, which is alarming since the latter three are more likely to be targeted than Sweden and Finland. India, Brazil and Mexico on the other hand, rank near the bottom.
More than half the respondents believe a cyber arms race is already going on and 36% are of the opinion that cybersecurity is more important than missile defence. Nearly half said that it's as important as border securiry.
Global agreement to share information recommended
Governments and private sector companies need to cooperate better on sharing information about possible threats. The public also needs to be educated and more attention being given to secure smart phones and cloud computing.
China lagging behind
Considering how active China is reputed to be in cyber warfare, it's surprising that the report finds that they are no better equipped to defend themselves than countries like Poland and Austria. Makes you wonder if the talk about China's super elite Cyber army is exaggerated? If not, why don't they make sure they are better protected against attacks? Provided, of course that the report has the right information.
Apparently the West is so far scrambling to bolster its capabilities as I wrote about in Cyber Warfare – hackers to the rescue? six months ago. Hackers are both a concern and possible assett when it comes to defense in cyber space. A few days ago Anonymous released a recording between the FBI and UK police discussing efforts against hackers. Once again, can't avoid thinking that it would be much better if the members of Anonymous and other such groups could give governments a helping hand. Let's face it they exist and could use their skills in beneficial ways.
US warns against Iran, China and Russia
On January 31st James Clapper, US intelligence officer told the senate that Iran is accelerating its activity in cyber space and warned that China and Russia have aggressive capabilities. Iran, Russia and China on the other hand accuse the United States of being the main agressor in cyber space.
What's your opinion? Do you agree that an arms race is already going on in cyber space? Are Iran, China and Russia as active as we are led to believe by US intelligence and the news? Did you know that 1,000 attacks a minute take place world-wide? Is a full scale online war more likely than a nuclear conflict? Is enough being done to protect us against attacks in cyber space? What more could be done? Will it actually go as far as an online war? If so, will it paralyze the world and who will be the winner?
Should the US government have the power to shut down web sites world wide? Or do you agree with Wikipedia and Google that the proposed bills amount to Chinese style online censorship? Devote 2 minutes to watching an informative video about the bills:
If congress pass the bills, anyone posting a home video online with a song playing in the background could in theory be accused of piracy and their site shut down. The Obama administration has stated it's not in favour of the proposed legislation since it threatens an innovative and open internet. So if worse comes to worse, the president could presumably veto it? Some members of congress however, are keen on the bills in order to please Hollywood and the musical industy.
Would the bills be the end of internet as we know it?
This is what Wikipedia has to say about the bills: ""They put the burden on website owners to police user-contributed material and call for the unnecessary blocking of entire sites. Small sites won't have sufficient resources to defend themselves. Big media companies may seek to cut off funding sources for their foreign competitors, even if copyright isn't being infringed.
'Foreign sites will be blacklisted, which means they won't show up in major search engines. And, Sopa and Pipa build a framework for future restrictions and suppression. Proponents of Sopa have characterised the opposition as being people who want to enable piracy or defend piracy".
According to Jimmy Wales, "The bill is so over broad and so badly written that it's going to impact all kinds of things that, you know, don't have anything to do with stopping piracy."
Sopa and Pipa actually propose that anyone found guilty of streaming copyrighted content without permission 10 or more times within six months should go to jail.
Would Sopa and Pipa completely change social media networks like Linkedin and Facebook because they would need to police everything their members post? Will online freedom of speech be severely resticted by the bills? Or do you agree with Robert Murdoch who has complained about the White House not supporting the most extreme elements of the bills? Do you want to keep the internet as it is or should it be censored world-wide by the US government?
When democracies lose economic power democracy itself is weakened.
Hu Jintao may be shorter than Obama but China still makes the smartest moves on the geo-political global chess board.
This year China, the world’s largest dictatorship, overtook Japan to become the second largest economy in the world and replaced the United States as the world’s top manufacturing country.
The US on the other hand, as we all know, has a huge budget deficit and its credit rating has been down graded. China is the largest holder of US debt, so no wonder it’s showing its power.
Fiercely Chinese anti democracy rhetoric
Chinese state-owned media openly blasted the US and the failures of the West. Even warning Chinese citizens about the dangers of democracy.
Following the U.S. debt deal, Chinese newspapers provided some of the most biting anti-Western, anti-democratic commentary. For example:
“The West can no longer cover up its problems. The rise of emerging powers is challenging Western dominance. However, the West only tries to deal with these problems by highlighting past achievements. Political reform is unlikely to make any more progress in the U.S. than in other countries — despite the illusion of change that comes as parties rotate with elections … Western countries are losing the authority of their democratic system.”
Contrast that to statements supporting the US dollar coming out of Japan, the second largest holder of US debt.
China buying Europe at bargain prices?
Not only does China hold a lot of America’s debt. Chinese premier, Wen Jiabao, has also thrown the euro zone a vital lifeline and pledged to buy billions of euros of European debt to keep the single currency project alive.
And unless someone else, like Saudi Arabia or India, start buying continued Chinese purchases of U.S. and European government bonds will be essential to maintaining global financial stability.
“Stable Europe vital to China”
When Chinese Premier Wen Jiabao was on a tour of European capitals recently, he stressed that a stable euro zone is vital to China, Europe’s friend.
From Beijing’s perspective, when it comes to Europe, self-interest and altruism actually coincide.
If China were to buy, say, half of all outstanding Greek sovereign debt (for a bargain of around $220 billion), it would not only resolve the euro zone’s problems and add to Chinese prestige but it would contribute to giving Beijing the kind of reserve asset it needs to diversify its holdings out of dollars.
And it’s interesting to note that as a result of U.S. and European actions in financial markets, there is now the possibility that China could buy even sensitive assets from Europe, at bargain prices.
Money makes the world go round
China is today able to do what the US did yesterday i.e. sequence and prioritize policy objectives across a great number of sectors and focus on achieving them, ignoring distractions, and not allowing events or passions to hijack national attention.
China continues to produce and Westerners keep on consuming on borrowed money, not least from China, which is an equation that doesn’t add up. Soviet communism declined because the economy didn’t add up but that’s not the case with China whose economy is capitalistic while the government keeps a firm grip on power and its people. Most likely the majority of Chinese would like democracy, but for China to become a functioning democracy is nevertheless way into the future since their government will crush dissent.
What’s the strategy of the West?
Today America and Europe are suffering from lack of vision and strategy and seem unable to resist the next big battle in Washington or Brussels and the desire to take on yet another complex security challenge (maybe Syria) to distract from the more important geo-strategic challenges of the day.
China stays on track — and the West seems unable to come back
Not only is the Chinese economy performing very well, they are also partly bankrolling the West. And money talks.
The US, Europe and India are the worlds largest democracies and China is the world’s biggest dictatorship. It does matter who has the best performing economy in the world. To ignore that would be a fatal mistake. But for some reason it seems Western politicians are not able to make an effort to stop power slipping away. That the center of the world is moving East has been obvious for a long time, but what surprises me is that the West doesn’t seem to be able to come up with a strategy to stop, or at least delay, it. What’s your opinion? Is China’s geo-strategic policies making them the winner of the geo-political global chess game? Do you believe China is taking over the West? Or will Western politicians get their act together and, again, start start making intelligent moves on the global chess board that work? If not, it will be a set back for democracy.
(Photo: United States Government Services – Flickr)
