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14 April 2024

Financial downturn fuels shift of power to East


The global financial crisis has accelerated the shift in the balance of power from West to East, analysts at the Davos forum said yesterday.

But that movement has also brought about fresh challenges on issues ranging from employment, economic development to human rights, particularly when it comes to China, they said.

Hirotaka Takeuchi from Japan's Hitotsubashi University said it was "absolutely" the global crisis that had fuelled the trend eastwards.

"They are dead right. The key ground is Asia," he said, reacting to a poll by British broadcaster BBC, which found that some 60 per cent of those surveyed said the crisis has propelled the shift in power to the East.

"Japan's volume of trade with China has reached 48.5 per cent. That's the reality and that's the future. If you include India, that's going to be the main playground for us," added the dean of the university's Graduate School of International Corporate Strategy.

Kenneth Roth, the Executive Director of Human Rights Watch, said: "I do think that the economic trouble has led to the acceleration of the rise of the East, particularly China."

Gerard Lyons, Chief Economist of Standard Chartered bank, said the shift in the balance of power was "multi-fold".

"They are the countries with the financial resources – China, Qatar, they are the countries with resources, such as South Africa. They are the countries that can adapt and change," he said.

However, the shift has prompted concerns.

"The jobs are in the East, the jobs are unfortunately not in the West, that's where the challenge is," said Lyons.

"The reality is that many people in the West are finding it hard to come to the terms to the fact that they are seeing a shift in power," he added.

Roth, meanwhile, pointed to the rise of China as a concern. "I am worried about the political consequences. Will China be seen as the model of economic development without political liberalisation?" he asked.

With the perceived shift in the balance of power, emerging giants such as India and China have been asked to shoulder greater responsibility in the world arena. But experts on China told a separate session at Davos that the expectations on the Asian giant were "misplaced".

"Let's [use] the metaphor of Yao Ming, six metres tall... The height is there but the muscle isn't there," said David Li, who is director of the Center for China in the World Economy at Tsinghua University, referring to the Chinese NBA basketball player. "The expectations on China playing a role in world affairs is very much misplaced," he added.

"Never before in history and never will we observe a country as poor as $3,000 (Dh11,000) or $4,000 per capita playing the role of world leader," he said.

Stephen Schwarzman, who is Chairman and CEO of Blackstone Group said the world's expectations on China had been lifted as China has been doing so many "amazing things".

"Remember that people watch China do amazing things. So they say ... why don't they help us out and do something that is usable globally?"

"The world wants to handover the baton to China because, they're saying look why don't you guys just make it happen? Most people in the West have no idea that China's per capita income is number 100 in the world," he said.


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