Shift of power in the global economy

George Soros has written an interesting article for the FT http://www.ft.com/cms/s/0/24f73610-c91e-11dc-9807-000077b07658.html

If what he says is right (and he has a bit of a track record) then it looks like the emerging economies and China in particular will reach positions of global economic dominance much faster than previously thought.

Think what the implications would be for the West - we could well be standing on the cusp of a new epoch. Modern capitalism and its concomitant liberal democracy, have formed a Western consensus that shaped every aspect of these countries' societies and also bullied the world through its superior economic and military might.

Could China shatter the paradigm by proving that economic growth and innovation don't need the air of civil and political liberties to survive? Or will China's rise to dominance lead to a revolutionary change in attitude and obey the received wisdom that great affluence fosters the desire for greater independence in every aspect of life?

And what would living in a world dominated by China be like? Just think about the cultural, economic and societal changes that we might see . . . the mind boggles. Will we all be watching Chinese sitcoms then?

Some have argued that by controlling the price of their currency, the Chinese have missed a trick but is it not more likely that they have been attempting to create such a large trade surplus and vitiate the efficiency of the exchange and trade markets to such an extend that as they allow the currency to float more freely, they produce the conditions that allow them to be catapulted into an even stronger economic position. (My that's a long sentence). By forcing the developed economies on to their crutch, these economies lose the capacity to be self-reliant in a vast area of economic activity - so the fall is much harder when China kick that crutch away. The analogy is with the supermarket who employs predatory pricing to grab market share and then replaces the bargain basement prices with over-the-odds monopoly prices.

Be warned :)