“Historically, the birth of new economic superpowers has caused great global instability”
This quote by a BBC economics editor had given me food for thought and a reminiscent to a piece that I’ve
done on why the 19th century liberal international order was not sustainable. Before World War One, the international political economy of the Western World was a time of rapid economic development and liberalization where free trade was the at the heart of the British Empire. However, this liberal order came to a sudden halt with the onset of World War One. One of the reasons for this was the rise of Germany as a major rival to the main powers of Europe and United States both economically and politically. In my essay, I argued it was the flaws of the Concert of Europe (equivalent to the UN today), the gold standard and irony of free trade. With Germany absorbing the free flow of advanced skills and products from England, it was able to catch up and compete with the hegemonic status of England.
Coming to back to present time, we see similarities in today’s economic order. With its economic reforms, China started playing along with the world on free trade and thus absorbing the skills and goods needed for it to compete. As we have seen, the catch up of China is phenomenal and has recently overtaken Japan as the second largest economy. With the arrival of its new strength both economically and politically, will it repeat history and cause much instability as we have seen in the 19th century? Of course, there are many theories that China’s growth is overhyped as it was with Japan in the seventies.
Nonetheless, my question is will China’s rise create conflict as the balance of power has been altered? Or will liberalism prevail and the world sees a win-win situation for the consumer when two economic superpowers compete.
