February 14th marks the Chinese New Year – the year of the Tiger. It is now clear that it is also the century of China. Here are six statistics to make the point:
- China became the world’s largest exporter in 2009, with 10 per cent of world trade, compared to 9 per cent each for the US and Germany.
- China beat the USA to become the world’s largest auto maker, producing 13.8m cars in 2009. The UK produced under one million cars in 2009. Two Chinese companies, SAIC and Nanjing Motor bought the rump of Rover.
- China is the largest foreign holder of US government debt: Uncle Sam owes the Dragon over $800bn. This creates an uneasy balance of mutually assured financial destruction between debtor and creditor.
- China is the largest investor in Africa. Chinese trade with Africa has gone from $10m a year twenty years ago to $100bn a year now. The Chinese offer a no strings attached approach to trade and investment, which is a welcome antidote to the strictures of the IMF. China gets the raw materials it needs, and plenty of support when it comes to getting its way at the Copenhagen climate talks.
- China had the world’s second largest economy in 2008: $8trn versus the USA at $14.2trn on a Purchasing Power Parity basis. The UK is a mere $2.2trn and going backwards compared to the dragon.
- China is the world’s largest producer of carbon emissions, with 21 per cent of the world total versus 20 per cent for the USA and 2 per cent for the UK. China blames this on the need to produce so many goods for western consumers.
In some ways this is a return to the historical order. The Middle Kingdom was always a huge slug of the world’s population and GDP. It really did not need anything from Europe, which meant we could not pay for the tea, china, silk and luxury goods we wanted from China in the nineteenth century.
The Brits got round this by becoming the world’s largest exporter of narcotics, via the East India Company shipping Indian opium. When the Chinese got uppity we burned down Beijing (1860, second Opium War), not long after we had burned down Washington DC in 1814. Getting back into narcotics and burning down Beijing and Washington may not work quite as well for us this time around.
Perhaps Mike Geoghegan, the boss of HSBC is leading the way for us. He has decided to run the bank from Hong Kong, starting from this month. This seems right for a bank which started on the Bund in Shanghai in 1865.
Whether it is trade or politics, it is clear we now live in a new bi-polar world order. On Valentine’s day, we are going to have to start learning to love the new world order.