China's slows but still grows, thanks to regional "gravity"
Friday, September 23, 2011 at 10:03AM 
Economist talking up a new book by Arvind Subramanian, who often writes for the FT. It's called "Eclipse."
Why China looms large in the future global economy, according to Subramanian: demography, convergence, and "gravity."
Convergence is a take on the healing of the "great divergence" that began around 1800: West grows 1200% over two next centuries while the rest lost 50% (much due to colonialization). The "great convergence," as many call it, predicts that the West grows 600% this century while the rest grow 1200%. Doesn't eliminate difference, but closes gap mightily.
Demography, in Subramanian's take, is all about heft: China is 4X size of US so only needs 1/4 GDP per capita to outpace. He blows off the ageing issue, according to the Economist, and he doesn't seem to be tracking the decrease in labor either.
Subramanian is no pie-in-the-sky trajectionist, meaning those who place China on a neverending track of 8-10% growth. He buys into the S-curve argument and says China will grow about 5% for next two decades. That's the pattern we've seen in East Asia in the past (reach 25% of US per cap GDP and then slow to 5-6% growth).
The idea that caught my attention was the gravity one:
. . . the "gravity" model of trade, which assumes that commerce between countries depends on their economic weight and the distance between them. China's trade will outpace America's both because its own economy will expand faster and also because its neighbors will grow faster than those in America's backyard.
Point being: China works its region while we do not. We play the drug war and China is working infrastructure like crazy in SE Asia. China will also logically work toward an Asian Union with its economy as the centerpiece, while the US puts up a border wall.
Back to an argument I continue to make: we need to be opening up to the south like crazy, not shutting ourselves off on immigration and drugs. We'll make ourselves weak relative to China and India due to their bulk populations, when our version of their interior rural poor are there for the taking.
We should be expanding the United States, not closing it down.
Reader Comments (10)
>Back to an argument I continue to make: we need to be opening up to the south like crazy, not shutting ourselves off on immigration and drugs.
Agree! This is not to say the Monroe Doctrine should be used to fence off the hemisphere in any neo-colonial way. Rather I agree there is substantial common interest (political and economic) in an "all-America co-prosperity sphere"
dave
Tom: Thirty five bodies dumped on an expressway. Tortured and shot to death. Thirty members of one family shot to death on a ranch. One hundred bodies dug up on another. Americans in Arizona and Texas screaming for the National Guard or the Army to be deployed. Our politicians are put on the spot. They have to react.
I was in this game. Five years in DEA. The problem is addiction. We have in the United States a huge population of addicts. No one does anything about that. They want drugs. They will buy drugs. Tough young men in other countries are willing to risk their lives to make money selling drugs to our addicts.
Columbia was almost destroyed by the narcotics trade. Men are still dying there in the battles between the narco terrorists and the army. A beautiful country almost brought down by this evil. Mexico is in serous trouble. Now the cartels are at war with the Mexican government and it's president. They are starting to dump bodies in the tourist areas. This is a warning to the government. A strike at the economy.
Small boats loaded with illegal immigrants are landing on the beaches here at night. The Border Patrol has units stationed on our beaches now. This is crazy. People are out of work and they are resentful. The Mexican Army has asked permission to cross the border into the United States when necessary to pursue drug traffickers. This has the right wingers going ballistic. We have people talking about minefields out here.
Our huge appetite for illegal drugs has to be addressed. Right now, as dumb as it sounds, the wall is the only answer.
Dr. Barnett,
235 years after independence from Britain, America is still thinks of itself as being a European nation transported across the Atlantic to the New World, uncontaminated by indigenous tribes. Most Latin American nations don't see themselves that way - and that is the USA's major problem.
Two of Huntington's books echo these sentiments. In the "Clash of Civilizations" he draws a sharp distinction between the rich US and the poor Latins (separate civilizations!) and in "Who are We" he bemoans the loss of a "pure" White Anglo-Saxon Protestant identity to marauding Mexicans.
That, in a nutshell, is why "you are not working your neighbourhood" and that is why you are not likely to do so in future.
Admit it, there is a deep psychological barrier towards engagement in Latin America.
America has spent the past two decades ignoring its backyard while chasing problems half a world away. America will regret it.
I can easily get any drug known to man, well some might take a few days.
The war is lost, legalize the drugs and kill off the monster that rides on it's back. Organized crime.
"China will also logically work toward an Asian Union with its economy as the centerpiece, while the US puts up a border wall."
Referenced from: http://thomaspmbarnett.com/globlogization/2011/9/23/chinas-slows-but-still-grows-thanks-to-regional-gravity.html#comments#ixzz1Yt728BtJ
An Asian Union--nice idea, but just take a look at the East Asian Union where China wanted to become the centerpiece. The Asian countries invited the USA and even Russia to join this club because tehy are afraid that China would be the mastermind.What do you mean by an Asian Union? China, India, Japan and South East Asia? A organization like the European Union or what would be the role model? More phrases and slogans than real substance. What would a Asian Union be like? A common market, a large free trade area, a monetary union, an integrated Asian gobverment while no Asian NATO exiists?Has China ever proposed something like a Asian Union, if it is so wavering in its attittude to the already problematic East Asian Union.Aren´t this the pipedreams of a popstrategist? And do the Asians want to suffer the destiny of the European Union?
Summarzing the last months of this nice website: G-2 (US-China), G-3 (China-India-USA), now Asian Union--nothing works and will work!!! That´s the reason why in the German Foreign Ministery Thomas Barnett is called a popstratgegist and they don´t take his ideas serious.
"We do not work the neighborhood..."
So having our primary or secondary trading partner (depending on latest interpretation of stats) right next door. Having the longest undefended border in the world. Having our primary oil supplier right next door. And notwithstanding their domestic politics, having a strong and healthy political relationship doesn't count?
It can be reasonably debated how much of Mexico's problems are caused by us, but by that very measure then a fair bit of credit is due to us for the lack of problems with our northern neighbor.
I would respectfully submit that if Mexico had a similar approach to freedom of speech, property rights, independent judiciary, government corruption, and separation of civil and military powers as Canada, then even with their challenges vis a vi being the highway for southern drug growing nations our relations would them would be exponentially better.
It's easy to focus only on the negative and lay blame for such at our feet, although perhaps a tad deceptive given how China is building relations in its region often through bribery and extortion, but ignoring the extraordinary success on our northern border that is rarely duplicated elsewhere is rather disappointing.
Even if the neighbors comment is expanded to Central and South America our relationship with Canada is a marvel.
Avidus,
Cast your net more widely than just next-door neighbors.
If China's region is SE Asia then it seems reasonable that America's region(s) would be North, Central and South America. If we compare relations then America could certainly do better.
In a number of respects America is in a rather different situation than China. America is quite limited by its means of appeal due to its liberal democratic nature. Unlike China, America can no longer simply buy off anyone it chooses to, nor can it simply build infrastructure as it is constrained by congress, rather than able to make decisions autocratically. It should also not be overlooked that it is in the best interests of many of our regional leaders to actively provoke America and refuse to do business with us, regardless of potential payoff for their people.
Could America do more - certainly. More free trade agreements would bolster ties but this is actively resisted by half of congress and voters, something China is not encumbered by. America could also be more neutral in regional conflicts, though when tried by secretary Clinton with Argentina this antagonized a key ally Britain and resulted in little gain.
We should note that even in our failings we have few countries actively arming themselves for real fears of their security such as Vietnam and others with China.
I would respectfully reiterate that America could do better with its region but comparing it explicitly to China is more akin to comparing apples and oranges. America is unable to simply bribe, coerce or extort to promote its interests; whether it is with cash, infrastructure or arms. America is failing to advance interests through positive means such as trade, education, intelligence and immigration but with an election year approaching I see little opportunity for change in the near future.
Avidus,
Nobody expects the American Government to adopt the Chinese modus operandi, but America expends for less diplomatic energy on Latin America than it does on Central Asia or East Asia.
One could argue that the last two regions are more important to America's natural security and economic future, but it seems odd that an undeclared civil war is raging on in Mexico right next door and nobody is bothered. It seems odd that the seventh largest economy in the World (Brazil) is not too far away and nobody seems to have a clear idea what the implications could be for America's future.
America knows how to get things done its own way (example the opening of China). A major trigger of inter-regional trade could be more carefully designed free-trade agreements. However, there seems to be little political will to do the needful (for example the Colombian free trade agreement is still pending).
It is also incorrect to assume that America cannot and does not buy off allies. The billions given to the Egyptians and Pakistanis is more blatant buying off than anything the Chinese do. The point is that the Chinese have no competition in many parts of the globe. Nobody except the Chinese are interested in building railways in Cambodia or ports in Gwadar or power plants in Africa.
Are the present levels of American engagement with Latin America healthy? The answer is no; and that was the point of this blog posting.