China And US Enter New Territory Over Economy
Monday 21 January 2013
China is forecast to have the world's biggest economy by 2016, but does this one-party state want to be the world's policeman?
Barack Obama officially begins his second term as US president but the legacy of his next four years may already have been written.
If predictions are correct, President Obama is set to preside over the end of an empire as America is eclipsed by China as the world's economic superpower.
The Organisation for Economic Co-operation and Development (OECD) has predicted that China will become the world's largest economy by 2016 - a milestone which will have profound global geopolitical implications.
The fundamental shift explains why the direction of the US/Chinese relationship is more important than any other over the coming few years. In a recent interview with Time magazine, President Obama put the relationship and the broader Asia-Pacific region at the top of his agenda.
"We are helping to shape and frame what the Asia-Pacific region will look like. That's critically important because that’s where the growth and population and increasing centre of gravity is going to be.
"China is going to continue to rise and we should hope for China's success. A stable China that over time is transitioning to a more open, democratic society would be really good for us economically and politically."
The US became the world's most powerful country economically more than 100 years ago, since then that clout has allowed Washington to establish itself as the world's leader.
America has, to the benefit of some and the detriment of others, acted for decades as the world's policeman.
It has the world's pre-eminent military force and the most advanced monetary system. The US dollar is the only genuinely global currency.
It is no coincidence that organisations like the International Monetary Fund and the United Nations should be based in America.
All that has been possible because of America's position as the largest economy on earth and victory in the Second World War.
But China's meteoric rise over the past few decades could change everything.
If the OECD is right, then the economic sun will set for America in the
second half of 2016 - three years into Mr Obama's second term.
America will no longer be able to boast about being number one, a fact that is bound to play as a pivotal moment in the psyche not just of Americans but of those who will be taking the baton - the 1.3 billion people of China.
As the economic leader, will China take on the responsibility as the global policeman? Will an ever increasing Chinese clout shape world events? Will the West increasingly bow or succumb to Chinese demands because their economies are so entwined in China's?