American Decline? China’s Rise?

The evidence of American decline is mounting – mainly because of the seeming paralysis in the political system about debt and deficit. Meanwhile the phenomenal rise of China (see Bob Zoellick’s comments on China’s growth by 2030 being equivalent to 25 new South Koreas) is mounting, although always subject to the possibility of domestic disruption.

These were some of the themes I canvassed speaking to Australians and international visitors at the Chartered Financial Analyst Institute’s Australia Investment Conference.

I briefed them on the debate among Australian academics Professors Hugh White, Ross Babbage, Paul Dibb on what this might mean strategically.

When all the cautions and caveats are expressed, we still have to consider the warning by Professor Niall Ferguson, celebrity historian, that sometimes empires can collapse suddenly. It can be like a fall off a cliff. They are not necessarily drawn out affairs like Edward Gibbon’s interpretation of the fall of Rome. The crisis of an imperial system is often triggered by acute fiscal duress.

The emerging Republican field does not inspire friends of America with confidence although there is one ray of hope: none seems to have an appetite for military adventure. And Ron Paul’s second place in the Iowa straw poll shows that political activists on the right now understand that its wars are dragging America down economically.

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