Martin Jacques, author of “When China Rules the World: The End of the Western World and the Birth of a New Global Order,” tells Breitbart News Daily that changes within China’s economy are largely responsible for the drop, and this is only the beginning of internal changes there sure to continue to impact U.S. and world finance in a big way.
While China’s growth rate remains higher than the Unites States’, Jaques claims the Chinese government came to see its 10 percent rate of growth as “unsustainable and undesirable, undesirable in the sense that the cost of that growth, for example, environmentally, was simply too great.” The current growth rate is approximately 7 percent, down from 10 percent, according to Jaques. Because the consumption of commodities was central to their growth, the current drop has had significance across commodity-producing countries around the world.
“The other thing that’s happening,” says Jacques, “is the Chinese are trying to shift the nature of their economy from one that is really very dependent on exports” and the state’s’ investment, a big cheap labor supply, “to one which is more recognizable to a developed country…” That shift will put much greater importance on a domestic market, capital and labor productivity, efficiency and research and development.
Jacques believes the Chinese will be successful with the transition, although it will take time. In the end, it has ramifications both good and bad for the rest of the world, including America.
For a further sense of the significance of the issues at hand, you can read a recent Guardian column: “China is rising as the US declines. Britain can’t ignore this reality“, taken from Jaques’ website and excerpted below.
The process began this year when the British government announced it would join a Chinese initiative to help fund Asia’s enormous infrastructural needs. The UK became the first non-Asian country to join the Asian Infrastructure Investment Bank (AIIB), after which more than 30 other countries joined, including Germany and France.
The United States opposed the decision because it saw the AIIB as a threat to the International Monetary Fund and the World Bank. Britain has long been the US’s foreign policy shadow, so the decision to join the AIIB was the most significant act of independence since 1944, when John Maynard Keynes argued with America’s Dexter White at Bretton Woods over the new international financial order.
The underlying thinking behind the British decision has since become clear. This was no flash in the pan. The key mover is the chancellor, George Osborne. His approach is based on a recognition of the profound changes in the global economy caused by China’s rise. At the time of the last state visit to Britain by a Chinese president, that of Hu Jintao in 2005, the UK economy was still slightly larger than that of China: today China’s GDP, by the most conservative measure, is over three times greater. We are fast becoming a minnow by comparison.
Since 2005, the financial crisis has rendered western growth rates close to zero, left their economies debt-ridden, and made the global economy ever more dependent on China for growth and capital. This is the new reality that imbues the thinking of any government, right or left. To their great credit, Osborne and his party have seized the nettle.
The entire Martin Jacques interview with Breitbart News Daily host Stephen K. Bannon can be heard below.