Many people hope that the world governance designed by Americans and British after the second world war can be reformed. I am skeptical, Netherlands and Belgium together have more than 4% of the IMF/WB vote, which is more than China. The upcoming IMF vote and quota reform will change this slightly, but will be far from reflecting the true power structure of the 21st century.
With the upcoming collapse of the Pax Americana, bilateral ties are becoming more important. Take a look at two Financial Times articles:
- Gulf and Chine closer ties article : A quote
“Drawn by mutual self-interest, China and the Gulf – the two great pools of wealth in the world today – are moving ever closer. In the coming days high-powered delegations from several Abu Dhabi investment bodies and from Qatar are expected in Beijing, followed by a senior investment official from Saudi Arabia.
Sheikh Mohammed Bin Rashid al Ma ktoum of Dubai, vice president and prime minister of the United Arab Emirates, last week visited Hu Jintao, the Chinese president. Mr Hu was quoted as urging companies from both sides to increase investment in each other.”
““We see the world economy as revolving around us, our desires and our standards,” says David Rubenstein, co-founder of the US-based Carlyle Group, which is partly owned by the Mubadala investment arm of Abu Dhabi. “But the economic centre of the world is beginning to shift from the US and Europe to the Middle East and Asia.”
The Gulf has been attracted to China for some time. The Chinese economy continues to grow strongly and the currency is appreciating at an accelerated rate, with many analysts predicting that the renminbi will soon rise to about 6Rmb to the dollar. According to a recent economic research note by JPMorgan Securities out of Hong Kong there is a “virtuous circle of trade and investment growth between China and other emerging economies, particularly the commodity producers”, which helps to moderate the global downturn. The links between the Gulf sovereign wealth funds and the China Investment Corp, the official Chinese sovereign fund, have also grown closer.”
- Article on India following China in bulding close ties with Africa. A quote:
“India will unveil on Wednesday a “blueprint” for its intensifying engagement with Africa, a symbolic step that reflects New Delhi’s anxiety over China’s growing influence on the continent and its desire to mimic the close economic and commercial ties forged by Beijing in recent years.
Manmohan Singh, India’s prime minister, on Tuesday announced duty-free access to Indian markets for the world’s 50 least developed countries (LDCs), 34 of which are in Africa, as part of a package of measures designed to highlight New Delhi’s commitment to deepening relations with the continent.”
I have been presenting this view form more than a year now on this blog. The center of world economy is moving to Asia. At the same time the pace of innovation is not fast enough to avoid the upcoming global energy crisis (I guess only the post-crisis period with oil prices topping 200 $/brl will breed necessary innovation and commercial roll-out, now we are stuck in the dead and road of biofuels, which leads to more C02 emissions and to agflation). In this context the very close ties between China/India an Africa and between China and Middle East should be seen a a great challenge to the sustainability of the further development of the Western world. This should be a food for thought for Western leaders.