A multipolar world order once again
Its stability will depend on how the US, China and India will benadble and willing to work together as well as with other countries.
AS US Secretary of State Antony Blinken returned from his recent trip to China, he must have wondered what exactly the trip achieved. The answer: not much. A lack of trust between both countries hinders any meaningful cooperation. But beyond that, Blinken simply doesn’t wield the same level of influence that his predecessors once did.
Since the fall of the Soviet Union in late-1991, the world economy has been dominated by one superpower, but is now gradually moving towards a multipolar system dominated by China, India, and the United States. The peace dividend that once anchored a global economic trajectory over the last 50 years is now being challenged by a new world order.
The greatest strength of both China and India is a very large, hardworking, and thrifty population, enabling a much higher growth potential and ensuring that they do not become stuck as middle-income countries.
The main threat to their success would be the removal or decline of market forces, reverting to how their societies were structured before the reforms of the 1980s. That is unlikely to happen: few would want to return to those days of autarky, stifling regulations and even famine, especially those who lived through it. But it is a possibility that cannot be ruled out entirely. Ideology is one of the greatest threats to progress.
China is already a superpower in its own right. The size of its economy is rapidly approaching that of the US. As standards of living improve, growth has inevitably slowed down. But growth should remain sustained for the foreseeable future. As costs increase, Chinese products and services are moving up the value chain. Its citizens are likely to become as wealthy as those of Japan or South Korea within the next 20 to 30 years.
Until very recently, India’s economy had been growing more slowly than China’s. Painful reforms still lie ahead to free up market forces, especially in agriculture and manufacturing. Yet we believe its potential has barely been tapped.
We expect the country to become the third largest economy in the world in the coming decade (it currently ranks fifth behind the US, China, Japan, and Germany). It might well surpass the US within the next few decades. India today is probably the most ideologically pragmatic country in the world today when it comes to its global economic policies.
Despite the Us/europe threatening sanctions, India today takes in a huge amount of Russian energy at low cost below price cap (1.5 million barrels of oil per day) which helped to stabilise inflation and provide a foundation for “China + 1” diversification strategies of many Western multinational companies.
The US has a much smaller population compared to China and India: Chinese and Indians are about four times more numerous than Americans. The US economy is also much more developed: the average American is six times richer than the average Chinese and 30 times richer than the average Indian. Both factors (a smaller population and an already high level of development) limit America’s further growth. But it will undoubtedly remain a very strong power. The view of many in China of a declining America because of a perception of political chaos and a workforce that may not be as hardworking as the Chinese is misplaced. The US economy will remain one of the most competitive and innovative for many years to come.
The stability of a multipolar world will depend on how those nations, each armed with nuclear weapons, will be able and willing to work together as well as with other countries. The US will have to come to terms with the fact that it cannot convert or control China or India. As for China and India, their growing influence around the world comes with greater responsibilities. Their legitimacy as global superpowers is yet to be achieved in many parts of the world.
Middle East
Yet it is also dangerous just to think that the world has to choose between the US and China (and India). The recent World Economic Forum event at Saudi Arabia (“Davos in the Desert”) reaffirmed the new power base among the Middle Eastern countries. Despite the recent Gaza conflict, these economies continue to thrive, and reformation and transformation are key buzzwords in the region. Together with the size of their sovereign wealth funds, these countries collectively will represent the new world order while Europe, in contrast, will continue to undergo a slow decline into eventual irrelevance.
It is with this cautious optimism in a fastchanging world order that we hope our book, to be launched on May 15, will open up new conversations and thoughts. You do not need to agree with everything we have written but it is meant to provide simple examples of 12 economies to generate thought-provoking observations for future generations to consider, as this will be the world that they will be inheriting from us.
The US will have to come to terms with the fact that it cannot convert or control China or India. As for China and India . . . their legitimacy as global superpowers is yet to be achieved in many parts of the world.