Wednesday, May 06, 2009

China & India Returning to Their Rightful Place at Top of the Heap?

Dr Kishore Mahbuani sees nothing surprising at the notion of India and China dominating the world economy. In fact, he says it's merely a return to normal.

The National University of Singapore professor says that for all but the last two centuries of the last two thousand years, China and India have been the world's dominant economies.

"In the 19th and 20th Century, first Europe took off and then North America," he says. "But the last 200 years were historical aberrations."

Just as Genghis Khan once established an empire that covered more than one fifth of the Earth's surface, stretching from Japan to Eastern Europe, many people feel that China and India are creating Asian world powers once again.

"This crisis has had an enormous impact on Asian minds," he says. "The West was telling us they knew how to run the world, telling us how to create the best economies in the world. How can you believe that any more?"

The US model of capitalism has delivered substantial benefits, however, not least in Asian economies. When China and South Korea copied Western ways of thinking and marketing, their economies took off.

Dr Mahbuani believes that one of the fundamental things Asians have learnt from the West, is the virtues of free market economics.

"It is a question of pragmatism," he says. "Asian states are rising because they have finally understood, absorbed, and implemented the best practices."

There are two serious questions about the predicted ascendancy of China and India. First, is the Western model of globalization really going to survive if we become subordinate economies? The whole idea was premised on the West remaining economically (as well as politically and militarily) dominant.

The second question is environmental. China and India are poised to be the nations hardest hit by climate change. The loss of the Himalayan glaciers will leave both countries unable to feed hundreds of millions of their people and beset by destabilizing social unrest. Sea level rise, severe weather events, general warming - both are particularly vulnerable to these also.

The ascendancy of China and India isn't going to be some smooth, seamless transition. I don't see the West agreeing to go gently into the night.

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