When China Rules the World: The End of the Western World and the Birth of a New Global Order

by Martin Jacques

Since 1945 the United States has been the world’s dominant power. Even during the Cold War its economy was far more advanced than, and more than twice as large as, that of the Soviet Union, while its military capability and technological sophistication were much superior.

Following the Second World War, the US was the prime mover in the creation of a range of multinational and global institutions, such as the United Nations, the International Monetary Fund and NATO, that were testament to its new-found global power and authority.

The collapse of the Soviet Union in 1991 greatly enhanced America’s pre-eminent position, eliminating its main adversary and resulting in the countries of the former Soviet bloc opening their markets a...

Never before, not even in the heyday of the British Empire, had a nation’s power e...

The dollar became the world’s preferred currency, with most trade being conducted in it and most reserves held in it. The US dominated all the key global institutions bar the UN, and enjo...

Its global position seemed unassailable, and at the turn of the millennium terms like ‘hyperpower’ and ‘unipolarity’ were coined to describe what appe...

From the beginning of Britain’s Industrial Revolution in the late eighteenth century until the mid twentieth century, Europe was to shape global history in a most profound manner.

The engine of Europe’s dynamism was industrialization and its mode of expansion colonial conquest.

Even as Europe’s position began to decline after the First World War, and precipitously after 1945, the fact that America, the new rising power, was a product of European civilization served as a source of empathy and affinity between the Old World and the New World, giving rise to ties which found expression in the idea of the West2 and which served ...

For over two centuries the West, first in the form of Europe and subsequently the United Stat...

We are now witnessing an historic change which, though still in its relative infancy, is dest...

The developed world – which for over a century has meant the West (a shifting idea over time, but basically the United States, Canada, Western Europe, Australia and New Zealand) plus Japan – is rapidly being over...

In 2001 the developed countries accounted for just over half the world’s GDP, compared with around 60 per cent in 1973, and by 2025 that figu...

It will be a long time, of course, before most of the developing countries acquire the economic and technological sophistication of the developed, but because they collectively account for the overwhelming majority of the world’s population, and their economic growth rate in recent times, and especially since the Western financial crisis, has been rather greater than that of the devel...

There is a battery of indices that illustrate this. After declining for over two decades, commodity prices began to increase around the turn of the century, driven by buoyant economic growth in the developing world, above all from China, until the onset of the global recession reversed this...

Whereas the developed world was responsible for 65 per cent of global manufacturing in 1970, compared with 35 per cent in the developing world, by 2010 the share of developed countries had fallen to 53 per cent, while...

1999 developing countries’ share of total foreign currency reserves was 38 per cent, while that of the developed countries stood at 62 per cent, but by 2010 the position had been reversed with the developing world hol...

East Asian countries, including China, Singapore and South Korea, enjoy enormous reserves, as do some commodity-producing nations, notably the oil-rich states in the Middle East. Several of these countries have invested a portion of their reserves in state-controlled sovereign wealth funds whose pu...

The sovereign wealth funds of Qatar, Abu Dhabi, Singapore, Kuwait and South Korea pumped billions of dollars into US banks between mid-2007 and mid-2008.

The meltdown of some of Wall Street’s largest financial institutions in September 2008 underlined the shift in economic power from the West, with some of the fallen giants seeking further support from sovereign wealth funds and the US government stepping in to save the mortgage titans Freddie Mac and Fannie Mae, partly in order to reassure countries like China, which had invested huge sums of money in them:

if China had started to withdraw these sums, it would have precipitated a collapse in...

The financial crisis graphically illustrated the disparity between an East Asia cash-rich from decades of surpluses and a United States cash-poor following many years of deficits.

It has typically been described as a global financial crisis but this is a misnomer because it was overwhelmingly a Western financial crisis.

While the United States, Japan, France, the UK and Italy (Germany being the nearest to an exception) have been hobbled by the financial crisis, with their banks remaining in an extremely fragile state, their economies mired in debt, GDP (in autumn 2010) still below pre-crisis levels, and their economies operating at up to 10 per cent below their past trend...

East Asia, apart from Japan, recovered very rapidly from the contraction in Western export markets, while India and Latin America als...

If the developed economies told one story, the developing economies told...

According to projections by Goldman Sachs in 2007, as shown in Figure 4, the Chinese economy will be almost the same size as the US economy by 2025, with the In...

By 2050, they project that the largest economy in the world will be China, which will be almost twice the size of the US economy, with the Indian economy followin...

These three will be followed by Brazil, Mexico, Russia and Indonesia.6 Only two European countries feature in the top ten, namely the UK and Germa...

Of the present G7, only four appear in t...

If these projections, or something similar, are realized in practice, then during the next four decades the world will come to look like a very different place indeed.

Of course, these are projections based on past trends, though they include the assumption, for example, that over time the Chinese growth rate will decline as its economy matures.

It goes without saying that the future can never be a simple extrapolation of the past. But it should be borne in mind that this does not necessarily mean that these projections inevitably exaggerate the rise of the developing co...

On the contrary, the opposite could be the case: these projections predate the Western financial crisis and therefore, at the time of writing, understate the underlying shift in economic power from the developed to the developi...

Such a transformed world was far from people’s minds in 2001. Following 9/11, the United States not only saw itself as the sole superpower but attempted to establish a new...

As the twentieth century draws to a close, the United States stands as the world’s pre-eminent power. Having led the West to victory in the Cold War, America faces an opportunity and a challenge: Does the United States have the vision to build upon the achievements of past decades? Does the United States have the resolve to shape a new century favourable to American principles and interests?

On December 26, 1991, the Soviet Union died and something new was born, something utterly new – a unipolar world dominated by a single superpower unchecked by any rival and with decisive reach in every corner of the globe. This is a staggering development in history, not seen since the fall of Rome.

The new century dawned a little more than a decade ago with the global community deeply aware of and preoccupied by the prospect of what appeared to be overwhelming American power.

The neo-Conservatives chose to interpret the world through the prism of the defeat of the Soviet Union and the overwhelming military superiority enjoyed by the United States, rather than in terms of the underlying trend towards economic multipolarity that we have just discussed, the significance of which was downplayed and largely ignored.

The new doctrine placed a premium on the importance of the United States maintaining a huge military lead over other countries in order to deter potential rivals, and on the US pursuing its own interests rather than being c...

In the post-Cold War era, US military expenditure was almost as great as that of all the other nations of the world combined: never in the history of the human race has the military inequal...

The Bush presidency’s foreign policy marked an important shift compared with that of previous administrations: the war on terror became the new imperative; America’s alliance with Western Europe was accorded reduced significance; and the principle of national sovereignty was denigrate...

Far from the United States presiding over a reshaping of global affairs, however, it rapidly found itself beleaguered in Iraq and enjoying less gl...

The exercise of overwhelming military power proved ineffectual in Iraq, while eroding the reserves of soft power – in Joseph S. Nye’s words, ‘the attractiveness of a country’s culture, political ideals and policie...

the Bush administration overestimated American power and thereby overplayed its hand, with the consequence that its policies had exactly the opposite effect to that which had been intended: instead of enhancing the US’s position in the world, Bush’s foreign policy seriously weakened it.

The neo-conservative position represented a catastrophic misreading of history.

Military and political power rest on econ...

As Paul Kennedy argued in The Rise and Fall of the Great Powers, the ability of modern nations to exercise and sustain global hegemony has ultimate...

America’s present superpower status is a product of its rapid economic growth between 1870 and 1950 and the fact that during the second half of the twentieth century it was the...

This economic strength underpinned and made possible its astonishing political, cultural and mili...