World - Power shift to China

More than its manufacturing prowess, it is the changed self-image that has made China the power it is today.
For a couple of thousand years before the 17th century, Asia and in particular China and India, were the richest and in many ways the most advanced countries in the world. With the industrial revolution, economic power shifted west to Europe and further west to the United States in the 20th century. Like the movement of the sun, the inexorable westward shift seems to be continuing in the 21st century as well, with every possibility of Asia and, in particular, China becoming the economic powerhouse of the world. If the 1964 Olympics heralded the emergence of Japan as an economic giant, and the 1988 Olympics in Seoul marked the entry of South Korea as a developed country, the just-concluded 2008 Olympics promise no less for China. China’s astounding double digit growth rate, continuing for a quarter century, its manufacturing prowess and export success are of course well-known. What is less well-known but, equally if not more, important for economic efficiency are the processes and organization which facilitate speedy project implementation and management of complex, multinational supply chains. These “soft” strengths were so much in evidence in the fantastic display put on at the opening ceremony and the flawless conduct of the Olympic Games. (We managed to keep up our reputation for sloppiness with two athletes participating in the inaugural procession without putting on the prescribed uniforms.) London, where the next Olympics will be held, and the capital of the country where the industrial revolution began, will find it very difficult to come anywhere near the Beijing spectacle.
In terms of economic power, the world has changed in other ways as well. In an earlier era, the rich countries of the west decided on the trading rules and the rest had little choice but to accept them. The Doha Round has been different, with India and China managing to stall the agreement on what they see as their national interest. While the cozy arrangement of an American heading the World Bank and a European heading the IMF continues, it is only a matter of time before this changes; in any case, both these once all-powerful multilateral agencies have lost their hold over much of the developing world. The growth in the Chinese economy has of course been astounding. It is already the second largest market in the world for automobiles, next only to the US but bigger than Japan and Germany; according to one estimate, by 2012, China is expected to account for more than 50 per cent of the global iron-ore consumption, 42 per cent of the aluminum consumption, and a third of the nickel output. (Its hunger for raw materials is such that commentators in the west are already referring to it as the new colonial power in Africa.) After the recent earthquake, China built one million houses in three months: No other country can even dream of building on such a scale. After the giant Three Gorges river project in China, it has become the dam builder for the whole world. It seems to be commissioning a 1,000-mw power station every week (or is it every other week?), boasts of a huge network of trunk roads where goods carriers move at 70 km an hour, and it will have a 120,000-km rail network, including several high speed links, by 2015. The list is endless: China has managed to combine the hard and soft infrastructure in an astoundingly-efficient fashion.
China is of course only the largest, most prominent, success story in emerging Asia. Most Asian successes have been based on taking full advantage of globalization, encouraging foreign investment, learning the best practice in the world — and improving upon it. Their saving rates and sound fiscal policies also helped. But, surely a change in mindsets, in self-image and confidence, were as necessary as the macro-economic factors. What triggered the change? While role models like Japan first and the four Asian tigers later, were surely important, an equally-important development was the defeat of the United States in Vietnam — the first time in three centuries that a major western power was defeated by an Asian country. If it could be done on a battlefield by a relatively small and backward country, surely it is possible to compete with them, in fact beat them, in economic efficiencies and output?

Looking at the global economic picture, the contrast between the west and many Asian countries is stark. Europe is experiencing negative growth and so is Japan (while geographically an Asian country, having been classified as “white” in the heyday of apartheid South Africa, it surely is part of “The West”?). The US too is slowing down, its financial system is in a mess and the fiscal imbalances are huge. And, in a parallel to Vietnam, the sole superpower faces the prospects of a defeat in Afghanistan against a resurgent Taliban and al Qaeda.