Can Europe and China Shape a New World Order?
Grant, the director of London's Center for European Reform, argues for a "strategic partnership" between the EU and China to confront global problems that affect them both. He acknowledges the obstacles. With Europe's trade deficit with China at $235 billion, almost as big as the United States' trade deficit with China, Europeans are getting frustrated with China's currency manipulation and dumping of goods. Like the Americans, the Europeans do not approve of China's human rights practices or policy toward Tibet. And they worry about China's foreign policy of supporting dictatorships in Africa, Central Asia, and the Middle East in exchange for raw materials. Still, Grant believes that a strategic partnership with an increasingly responsible China is possible and calls for action in four key areas: climate change, weapons proliferation, Africa, and global governance. That goal may be overly optimistic, but Grant lays out a positive, practical agenda and shows that in some cases, at least, China is creeping toward more of an "international stakeholder" role. Engagement with the EU might well help that process along.
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America's economy is in its eighth year of sustained growth, transcending the German and Japanese "miracles." This is no fluke. America's unique brand of entrepreneurial capitalism is based on a series of advantages that explain the stunning success of the 1990s and provide the basis for extending this winning streak. These strengths include deft managers, technological innovation, and a culture that values rugged individualism -- all fueled by finance capital that can nimbly meet the needs of a globalized, rapidly changing economy. Furthermore, the era of the deficit is over. Pessimists who warn of inflation should be ignored; American business leaders understand that today's low level of inflation is self-perpetuating. America's prosperity is structural, not transient, and its lead over Europe and Asia will only widen with time. America had the twentieth century. It will also have the twenty-first.
Eurasia is the axial supercontinent. It is home to most of the world's politically assertive states and all the historical pretenders to global power. Accounting for 75 percent of the world's population, 60 percent of its output, and 75 percent of its energy resources, Eurasia's potential power overshadows even America's. For these reasons, the United States should begin paving the way to a transcontinental security system that will ensure Eurasia's future is more peaceful than its past.
Only a few years ago pundits were sure that the United States was losing to Asia and Europe and had to emulate their more state- directed economies to remain competitive. Now the conventional wisdom is that America is number one and that the rest of the world should adopt its more laissez-faire approach. In fact, neither caricature is right. Asia was booming and now it is slumping, but it will be back. Europe's underlying ossification will persist. But most important, while the U.S. economy is in a period of robust growth, nothing fundamental has changed. Its long-run growth rate has not accelerated, productivity has not risen, and the structural unemployment rate has fallen by one percentage point at most. Come the next recession, all this triumphalism will seem silly.
