China versus America: Good news from the two biggest economies shows how global power is shifting

China is still growing as the US ties itself in knots it will struggle to untangle

Share

This has been a week of global economic peril, concluding with a sigh of relief that echoed around the world. The Republican Party’s zealots finally backed down: President Obama showed steel in refusing to compromise on his healthcare bill, and life in Washington returned to what passes for normal, with the risk of a US default deferred until next year.

Then yesterday came the news that China’s economy, the world economy’s most important locomotive, had recovered from two lacklustre quarters to post year-on-year growth of 7.8 per cent. George Osborne could congratulate himself on the timing of his visit: the good sense of engaging as keenly as possible with China is clear.

But these two different events throw into stark relief the relative performance of the world’s two most powerful states, and that in turn reflects the rather rapid way that global power is shifting. Mr Obama made a pivot to Asia a key theme of his presidency, in response both to the economic opportunities on that side of the world and the rapid growth in China’s economic muscle, and arguably in its geopolitical ambitions, too.

The policy was a sound one, so the fact that Washington’s bitter political stalemate obliged him to cancel planned visits to two Asian  summits this month says a lot for the limits on the actual power of the man often described, erroneously enough, as the most powerful in  the world.

China, meanwhile, cruises ahead, its anomalous political architecture proving so far no serious constraint on its ability to continue hauling the rest of the world out of recession. The good news from Beijing yesterday received a muted greeting from many economists: the wild years in which China’s economy grew at double figures are undoubtedly over, and China’s new leadership does not want them back. Their challenge is to keep the economy growing fast enough to maintain a strong supply of jobs and to avoid incomes stagnating, so that the domestic consumption on which future growth will inevitably depend is not choked off – but they also know that dramatic growth figures will make it much harder to ram through their plans to curb inefficient and highly polluting industries. They need just enough growth to allow the economy to become leaner and more modern, but not too much to allow the unreformed parts to grow even fatter than they are. In achieving this, they have the advantage shared by all authoritarian regimes, that all the controls are in their hands, at least notionally. And they are managing them with impressive competence. Xi Jinping’s self-congratulatory claim last week, that “China’s economy is basically doing well” and that “the slowdown…was the outcome of our own adjustment initiative,” was largely correct.

China is still growing, the US is tying itself in knots which it will struggle to untangle and geopolitical power is pivoting to the East. But this does this not mean that we should resign ourselves to a new sort of suzerainty in our dealings with the Middle Kingdom. For many centuries, foreigners awed by China’s size and venerable age performed the kow-tow. Mr Osborne found himself in this undignified posture this week, poo-poohing the idea that anyone should be nervous about doing business with Huawei, a firm frequently accused of industrial espionage, welcoming Chinese management of our nuclear power stations, and saying nothing controversial.

Eight years ago, safely in opposition, the same Mr Osborne thundered that: “Threatening free, democratic Taiwan… is unacceptable. Suppressing Tibetan autonomy is unacceptable. Persecuting religious minorities … is unacceptable.” This time we heard nothing of those themes. There must be a way to register dissatisfaction without capsizing the relationship. But Mr Osborne failed to find it.

React Now

iJobs Job Widget
iJobs General

Online Advertising Account Executive , St Pauls , London

£26K-30k + Bonus, Private Medical Insurance, Company Pension: Charter Selectio...

Advertising Account Executive - Online, Central London

£25K-28k + Bonus, Private Medical Insurance, Company Pension: Charter Selectio...

Senior Infrastructure Consultant

£50000 - £65000 Per Annum potentially flexible for the right candidate: Clearw...

Public Sector Audit - Bristol

£38000 per annum + Benefits: Pro-Recruitment Group: Do you have experience of ...

Day In a Page

Read Next
 

It isn’t a proper rock gig if you don’t leave with your ears ringing

Chris Maume
 

Bubble or no, it's a great time to be an estate agent

Mira Bar Hillel
Homelessness: Why is the supported lodgings lifeline under threat?

Why is the supported lodgings lifeline under threat?

Zubairi Sentongo swapped poverty in Uganda for homelessness in Britain. But a YMCA scheme connected him with a couple offering warmth and shelter
A History of the First World War in 100 Moments: When the world’s biggest shed took over Regent’s Park

A History of the First World War in 100 Moments

When the world’s biggest shed took over Regent’s Park
The pain of IVF

The pain of IVF

As an Italian woman vows to keep the babies from someone else’s eggs, Julian Baggini ponders how the reality of childbirth is often messier than the natural ideal
Supersize art

Is big better? Britain's latest super-sized art

The Kelpies are the latest addition to a growing army of giant sculptures. But naysayers are asking what a pair of gigantic horse heads tells us about Falkirk?
James Dean: Back on the big screen

James Dean: Back on the big screen

As 'Rebel without a Cause' is re-released, Geoffrey Macnab reveals how its star perfected his moody act
Catch-22: How the cult classic was adapted for the stage

How a cult classic was adapted for the stage

More than half a century after it was published 'Catch-22' will make its British stage debut next week
10 best activity books for children

10 best activity books for children

Keep little ones busy this bank holiday with one of these creative, educational and fun books
Arsenal 3 West Ham United 1: Five things we learnt from the battle between the London sides

Five things we learnt from Arsenal's win over West Ham

Arsenal still in driving seat for Champions League spot and Carroll can make late charge into England’s World Cup squad
Copa del Rey final: Barcelona are paying for their complacency and not even victory over Real Madrid will put things right

Pete Jenson on the Copa del Rey final

Barcelona are paying for their complacency and not even victory over Real Madrid will put things right
Rafa to reign? Ten issues clay courts will serve up this season

Rafa to reign? Ten issues clay courts will serve up this season

With the tennis circus now rolling on to the slowest surface, Paul Newman highlights who'll be making the headlines – and why
Exclusive: NHS faces financial disaster in 2015 as politicians urged to find radical solution

NHS faces financial disaster in 2015

Politicians urged to find radical solution
Ukraine crisis: How spontaneous are the pro-Russian protests breaking out in Ukraine’s east?

Ukraine crisis

How spontaneous are the pro-Russian protests breaking out in Ukraine’s east?
A History of the First World War in 100 moments: The first execution at the Tower of London for 167 years

The first execution at the Tower of London for 167 years

A history of the First World War in 100 moments
Fires could turn Amazon rainforest into a desert as human activity and climate change threaten ‘lungs of the world’, says study

New threat to the Amazon rainforest:

Fires that scorch the ‘lungs of the Earth’
Liverpool, Chelsea and Manchester City: And the winner of this season’s Premier League title will be...

Who’s in box seat now? The winner of the title will be ...

Who is in best shape to take the Premier League prize?