GOOD MORNING FROM LONDON
Remember the bigger picture. China is on the Rise. The US is falling behind. The Balance of Power is changing. Washington wants to curb China, restricts its growth, prevent it from becoming the dominant world economic power.
Two US-inspired initiatives. First, demonise China, portray it as evil by asserting it is dictatorial internally and threatening externally. China is aggressive, expansionist, thirsty for power. Second, De-Couple in an effort to retard China’s development in the hope of stirring internal dissatisfaction and the weakening of Washington’s #1 opponent – the Chinese Communist Party.
Can de-coupling hurt China? Can the combined might of the West come together to blunt China’s economic progress? There will be some hurt. The West does have economic power. But can it significantly de-rail China’s surge of growth? That is for the future – only time will tell but so far Wall Street is giving China a big positive.
As an article in today’s FT by George Magnus states “Wall St businesses continue to beat a path to China’s red door…inward direct investment + portfolio capital inflows registered almost 3% of China’s GDP in the first half of 2021, nearly as high as the trade surplus. Many leading US and some European financial businesses have put money into their Chinese asset management + investment banking joint ventures. Holdings of Chinese bonds + equities have risen sharply.”
It is at this point that we should bear in mind the recent words of top US historian, Francis Fukuyama, who has admitted that his predictions about the End of History and the Triumph of Liberal Democracy will have to be reviewed in the light of China’s continuing growth. Tomorrow I will examine the reasons Magnus offers for his view that De-Coupling Can Work