The shift in power from West to East

January 28, 2009

One news theme I’ve asked our journalists to be alert to this year is the shift in power and emphasis from est to East.

The rise of China’s economic power during 30 years of reform and opening to the world is just one manifestation of this; the knowledge and service powerhouse that India has come in a globalised world is another. At Davos this year I’m moderating a panel on Asian innovation that will surely highlight software advances in Japan, Korea and Thailand as well.

I’m convinced the current global economic crisis must lead to a fundamental reassessment of how power and influence is expressed through the world, from manufacturing and service oriented Asia through the oil-rich Gulf.

This isn’t because of “decoupling” – that notion so prominent in discussion circles a year or so ago that said things like China’s economic boom could make up for any economic weakness in the U.S. That idea has been well and truly discredited as trade and money flows have caused bank after bank, nation after nation and economy after economy to buckle and bend in the current crisis.

No, it’s precisely because of “coupling” that the world will have to rethink radically its governance and regulatory and influence structures.

I see today’s opening session at the World Economic Forum as emblematic of this shift. The two world leaders taking centre stage at Davos today are not from the United States or from the United Kingdom or from France or Germany or Italy or Japan or Canada.

First Chinese Premier Wen Jiabao will address the delegates from business, finance and governments (including some 40 heads of state or government) outlining Beijing’s approach to solving the world economic crisis. His tour is being billed by Chinese officials as a “trip of confidence” — the very words signal China’s new importance on the world stage.

Then the conference plenary speech will be given by Russian Prime Minister Vladimir Putin, who reportedly will call for a change in the world economic order.

Two new messages from two players asserting their position on the world stage – will the delegates at Davos feel the tectonic shifts?

8 comments

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The world decision-makers know exactly what has gone wrong with the international financial system that is in deep crisis and threatening to plunge the whole world to chaos. There no pride to protect national interest if tomorrow the world will collapse – something that can be avoid with the concerted effort of rich nations – because of the new cold war between the West and the East. The timing of Davos conference is critical and speeches alone will not gender change needed in this financial mess that rich nations have helped to nurture.

Power is shifting from west to east is further proved by the recent report of IMF. This report says that the socalled advanced economies will suffer GDP growth of (-2%) while developing countries will contribute positive GDP growth of over 5% and this comes largely from India and China. It looks the 21st century will belong to the East.

Posted by Sat Goel | Report as abusive

Yes, it seems like history has its cycles and it looks like the East is making a return after around 500 years.

One thing should not be forgotten though, most of the biggest investments in the East belong to western corporations or investors. Thus, as the East rises so as the West. Good for everybody.

Posted by patlican | Report as abusive

why india is not mentioned ?
is it because a hype nation or colonial thinking ??

Posted by Srinivas VR | Report as abusive

Article Sates: The Shift in Power from West to East & I’m convinced the current global economic crisis must lead to a fundamental reassessment of how power and influence is expressed through the world, from manufacturing and service oriented Asia through the oil-rich Gulf.

The preceding is an interesting article title and an equally interesting follow-on statement…both sounding more hopeful than factual, i.e., we here don’t see the beef to back up either the article title or the follow-on statement.

OKJackGroup
oklahomajack.com

Posted by OKJackGroup | Report as abusive

Every nation has a fair chance to be the winner of the game… every few hundred years. The universe has cycles.

Interestingly, all the once-great powers of the world are all on the up side: Latin America (Brazil and Mexico); Middle East (Turkey, Arab countries); Russia; India; China.

I don’t know about the others, but China somehow has a 400 year cycle of economic power. It goes Han->South/North->Tang->Ming, and Ming ended during the 1600′s.
http://en.wikipedia.org/wiki/History_of_ China
http://en.wikipedia.org/wiki/Economic_hi story_of_China

Is a new world order in place? Not present yet, but under construction maybe?

Posted by stiko | Report as abusive

Dear Sir,
It is fact to be accepted china is going to be a key player in the times to come especially in the wake of huge saving rate of 40%.China is going to world lender and may dictate the economic policies in its favour especially in regard to US especially in the wake of dependence of US govt on China for subscription of its treasuries required to finance its colossal budget deficit.

Posted by mahesh natani | Report as abusive

The only power shift of any meaning and consequences is between US and China. Because of size and the nature of that shift.

While many East-West countries have traded during the past 20 years, these trades have benefited all fairly equitably when summed over this period. Except US-China.

The so-called globalized trades between US-China have benefited the principally the big corporations (i.e. their balance sheets and executives) in the US, and the state in China. Because that’s the way each country wanted.

When you sum up 20 years of massive US-China trade, the balance sheet shows:

a) Giant net benefits to major US corporations. US consumers also benefited, in the short term. But over a 20 year period, they actually lost much of value, except perhaps a very good time.

b) The Chinese state has gained tremendous net benefits, and since the state dominates so much, Chinese infrastructure, consumer and industries have also shared the very large net gain.

In short, globalization has produced reasonably good net gains to world countries. But the US comes out a loser and China the winner over the long term.

Posted by The Real Deal | Report as abusive