Is China Really a Threat to us?

Dambisa Moyo, author of How the West was Lost, and Niall Ferguson, author of Civilization: The West and the Rest, discuss the Eastern challenge to Western prosperity with the Editor of Standpoint, Daniel Johnson

The economist Dambisa Moyo (left) and the historian Niall Ferguson (Eliza Beveridge) 

Daniel Johnson: I want to start with something that happened exactly 100 years ago, in 1911. Oswald Spengler had the idea of writing The Decline of the West during the Agadir Crisis — a bit of gunboat diplomacy by the Kaiser which went wrong. Spengler decided this was an example of the West losing its nerve and he began this whole genre of literature about Western decline. He included the threat from Japan — “the Yellow Peril” — but now we talk about China. So is this something really new that we’re talking about, or have we been here before? And how worried should we be?

Niall Ferguson: What’s novel is that now nobody in their right mind believes history is a seasonal process, as Spengler did, and that we’re somehow destined by some natural force to enter the winter of our civilisation’s existence. 

DJ: But some people think the decline of the West is inevitable, don’t they?

NF: That’s right. They might have a different model from Spengler’s, and there are lots of different ways of thinking about the historical process. Most people like to think of it as being cyclical — I think that’s wrong actually, but that’s why people keep coming back to this idea. We’re all young enough — or should I say old enough? — to remember Paul Kennedy’s Rise and Fall of the Great Powers, which said in the 1980s that the West was in trouble, and Japan and West Germany were going to overtake the United States. We’ve seen this movie more than once and it’s a recurrent feature of the 20th century that somebody at some point is predicting the decline of the West. But what I think is different about today is that compared with 1911, there really is a very rapidly narrowing gap between the West and the rest, which there wasn’t then. True, before 1911, one non-Western country — Japan — had begun the process of catching up but it was still miles behind. It had some industry, but by comparison to Britain or any of the major European powers, and particularly in comparison to the United States, it was tiny. We’re in a different world now because if you use purchasing power parity as a measure, China’s gross domestic product is close to 90 per cent that of the US. The Soviets never got that close. For the first time since 1872, there is the possibility of another economy being bigger than that of the US, and it could happen within the next ten years. 

DJ: Dambisa, you think that we’ve thrown it all away. We had this dominant position here in the West and by our own folly, we’ve forfeited that position. But am I right in saying you don’t think it’s inevitable that we’re finished?

Dambisa Moyo: First of all, with respect to whether this is something new, let’s remember that if you look at Angus Maddison’s data, this is not the first time that countries like China and India have had the biggest share of global GDP on the planet. The reason I point that out is because you can imagine in the 1500s and 1600s people writing about the decline of China and what they were doing wrong, and what the other regions of the world including some European countries and the United States — with the advent of industrialisation — did right. But the main thesis of my book, as you rightly point out, is less concerned with China’s rise — about which there is an obsession — than about the West’s decline. Capital, labour and productivity are the three key drivers of economic growth and in that framework, there is a compelling case that China is on the rise. But my book is mainly concerned with Western policies. And yet our obsession is always with what China is doing, almost to the detriment of focusing on the very basic, structural things that need to be fixed in Western society. 

DJ: China has moved forward with astonishing speed in the last 35 years since the death of Chairman Mao, but think about Britain between Waterloo in 1815 and the Great Exhibition in 1851. There was a similarly spectacular rise in exactly the same space of time. Several other great nations — the United States to give one example — have also achieved that take-off. So why should we be worried about the Chinese catching up in this way? Is this really a threat to our prosperity or does this just mean that China is finally joining the West?

NF: First of all, you have to realise that they are not quite comparable. It took Britain about 70 years to increase its GDP by a factor of four. China has increased its GDP by a factor of ten in about 25 years. This is the biggest and fastest industrial revolution. It really does dwarf the British industrial Revolution in its size and its speed. That in itself is a reason to be concerned, because for China to grow at 10 per cent per annum for another 20 plus years, with a fifth of humanity living there, implies massive strains on the environment, on the supply of natural resources, even on the availability of fresh water in the eastern Eurasian landmass. So there are huge implications which make the British industrial revolution pale into insignificance. The other issue of course, which Dambisa’s book touches on, is power. This is not merely an economic phenomenon but also a geopolitical phenomenon. It has to be a cause of some concern that the economy poised to take over from the US as the world’s number one is run by a Communist Party. That’s an ironic twist to the end of history that Francis Fukuyama didn’t foresee back in 1989. For that reason, there is cause not to be complacent and say that this is really the triumph of the West in another form: it’s not really. We’d be kidding ourselves if we went to China and told ourselves that they are just westernising. They may be westernising the way they dress, to some extent the way they eat, the way that they do business, but not wholly. The way they do business is not in fact the same as the way it’s done in the West and of course the way they do politics is profoundly different. 

DM: According to some estimates, there will be nine billion people on the planet by 2050 — just a short while away. With nine billion people on the planet, I could give you a list of statistics that are shocking, even today. There are a billion people around the world who go hungry every day, the majority of whom are in Africa. And yet Africa is the one place which has the most untilled arable land left on Earth. We’re not even dealing with structural problems there. China only has seven per cent of arable land, and part of the reason why there’s such a hue and cry about China’s rise is that these resources are relatively scarce and the Chinese are leaps and bounds ahead of where the West should be in terms of securing natural resources — everything from arable land, to water, to minerals and energy. The reality is that the West has given it away. Essentially it’s been given away because a lot of Western countries, including the US, have been short-sighted. Brazil and Chile are China’s biggest trading partners in America’s backyard. Africa is historically and geographically closer to Europe, which should create a natural trading relationship, but instead you see a stronger, firmer relationship with the Chinese. This is not to say that the relationship is perfect — it’s evolving — but you only have to look around the world. It’s not just the emerging world where the Chinese have put down a very clear stamp, it’s everywhere from Australia to Eastern Europe to South America. In addition to that, the US are locked into this symbiotic relationship where they now owe so much money to the Chinese. I don’t think in the short term they can get out of it.

DJ: Controversially, in your new book, How The West Was Lost (Allen Lane, £14.99), you suggest that America could opt for a kind of suicidal, extreme option of protectionism, erecting new barriers, perhaps even defaulting on its debts to China. Do you really think that would be a sensible way of dealing with this challenge?

DM: No, I don’t. I’m not recommending them: I say that they are options. There are many economists on Wall Street and in the City of London who would argue very convincingly that the United States has already embarked on a stealth default through the exchange rate. And where protectionism is concerned, again, it is farcical speaking to an African. While I was in China last November, a Chinese person was brought to task about the exchange rate manipulation by an American. And the Chinese person replied: “How dare an American accost us about protectionism in front of an African when we know that America and Europe have been the leaders of protectionism — particularly in agriculture subsidies?” How do you square that circle? That is not to say that just because we already have protectionism that protectionism is a good thing — I’m just saying we live in the real world. I believe in the free movement of trade and capital and even labour, but the reality is that protectionism exists and so therefore it’s not off the table. There are studies that show large swathes of Americans urging politicians to talk about protectionism — we’ve got 30 million-odd people out of work in the manufacturing sector, jobs they say aren’t coming back. How do you sort this out? It’s a real constraint in the developed world.

NF: There’s one problem though — traditional protectionism is in fact illegal. The rules of the World Trade Organisation meant that when the Bush administration temporarily slapped on steel tariffs, it had to take them off pretty quickly. One of the issues here is what we mean by protectionism. I don’t think we have the option — even if we wanted it — to go back to the 1930s and Smoot-Hawley. We are talking really about exchange rate manipulation, and since the Chinese have been practising that now for the best part of a decade, it would be odd if no one else were tempted to join in. So the real issue is who wins the race to the bottom in the flat currency competition, who can most out-devalue the competition. I think this has got quite interesting lately because the Europeans didn’t stick to the script. The script said they were supposed to have a really strong euro and be mugs like the Japanese but, with brilliant Machiavellian ingenuity, the Germans orchestrated a massive sovereign debt crisis in peripheral Europe to try to drive the euro down. You can hear the crocodile tears in Bavaria at this crisis since it’s been very, very good for them. So the new protectionism is actually a game of quantitative easing, which is the new euphemism for printing money. 

DM: But again with protectionism, people are focused on more tactical, short-term issues. I’ll give you an example. There’s very clear, anti-trust legislation that governs corporations buying an asset. So if BP were to try to take over Exxon Mobil, there’s clear anti-trust legislation that is triggered. But the legal infrastructure of the international system has not kept up with some of the things that China is doing. There is no similar anti-trust legislation for a state going around and buying assets, which is why China, very cleverly, has bought all these resources around the world. It is virtually impossible to take them to task. There may come a time — and this is where the Chinese are brilliant, they’ve played this chess game several moves in advance — when people start saying that this is effectively anti-trust, the Chinese state purchasing all this land or purchasing all these minerals. But in fact, what they are doing now is not buying the assets on the ground any more, just the off-take. They are locking in long-term contracts — 30-year, 50-year, 100-year contracts. That to me is another form of protectionism. We don’t know how it will play out. 

DJ: Niall, in your book (Civilization: The West and the Rest, Allen Lane, £25), you talk a lot about religion and the importance of the Protestant work ethic in helping the West take off and create modern capitalism. You suggest that the Chinese are now adopting Protestantism and Christianity in general at exactly the moment when we are giving it up — “we” being Europe, of course — the United States is a different story. How far do you think that might herald the long-term demise of the Communist Party? How much longer can this organisation that really dates from the early 20th century continue to maintain its grip? After all, it was really communism that held China back for a generation or more. We might have been facing the situation we do now many years ago, were it not for this terrible mistake they made in the 1940s when they followed Stalin rather than the West. 

NF: That’s an interesting counterfactual you’ve raised there. It’s worth remembering how incredibly corrupt the Kuomintang regime was, and although Mao was a monster who inflicted millions of deaths in the Great Leap Forward and then totally disrupted China’s society again with the Cultural Revolution, there were certain things that the communists did that laid the foundations for what is happening now. They vastly improved education and primary healthcare and so China’s human capital was significantly better in 1979 than it had been in 1949. I don’t think any of that would have happened under Chiang Kai-shek. That would have been the same-old, same-old China which would have been so unequal that it would not have been capable of this kind of growth. So it’s a doubly uncomfortable story for you. Not only am I saying nice things about Protestantism but I’m also going to say some nice things about communism. The one thing that communist regimes did — and it’s true in Cuba too — is that they addressed the problems of profoundly unequal societies and left the populations better educated and healthier than they’d been before. You can’t have higher productivity growth — which is the key, as Dambisa points out, to China’s story — when people are starved and illiterate. 

DJ: But more than half the population is still very poor. 

NF: Yes, but compared with the situation of China in 1949, this is really a very, very changed society in which there are much higher levels of literacy and numeracy and they are basically well-fed. They’re poor but they’re not dirt-poor like they were back then. That’s in parenthesis. The bigger answer is to the religious point, the political point. What is happening in China in terms of religion is fascinating because Mao left a vacuum. Like all the great totalitarian leaders, he created a cult. But these cults are very ephemeral: the leader dies, the cult dies, a vacuum is left. The Cultural Revolution smashed up what remained of traditional Chinese culture quite successfully and there is a genuine thirst in China for something to fill that vacuum. The thing that’s filling it most successfully right now is Christianity — in particular, evangelical Christianity. There is an official church, which is doing pretty well and in control of the state — much as many Protestant churches in Europe were after the Reformation — but what’s really fascinating is the unofficial house church movement, which is growing astonishingly fast. The regime does not know what to make of this — I’ve seen that up close. Party officials are obviously ambivalent. They don’t like the fact that it’s happening but they’ve given up trying to stop it. There were anti-crucifix campaigns in Wenzhou as recently as the 1990s but they gave up. There are crucifixes everywhere — red neon ones that are quite fetching. The problem for the regime is that it knows there is a spiritual vacuum, and because of that, corruption and business malpractice are major problems. So there are elements in the regime that wonder if this isn’t the answer. 

Towards the end of my book I quote some of the people within the Communist Party who say maybe Christianity is part of what made the West successful, maybe it’s something they need. But at the other end of the party spectrum, there are people who are saying they can’t possibly let these house churches flourish. So this is a major dilemma which is only going to grow as the Christian community grows. If it carries on at the present explosive rate of growth, it will become a major factor in Chinese culture. Whether it becomes a political factor is really hard to predict. The one thing I would bet against right now is a kind of 1989-type event, a democracy movement in China. There is almost no appetite for it. The regime has drawn that sting successfully. So what we should not expect is that China goes back to Tiananmen Square and that a democracy movement suddenly topples the Communist regime. That only exists in the fantasies of a few, somewhat senescent neoconservatives in America who’ve never been to China. That’s never going to happen, at least not in our lifetime. What is going to happen may be something completely unexpected in a way that the Taiping Rebellion [from 1850 to 1864] was unexpected. Suddenly, some wacko decides he’s the son of Jesus Christ and an extraordinary millennarian movement explodes into life among the dispossessed and the relative losers of Qing China. Everybody in Beijing worries about that scenario, that the whacko suddenly gets some critical mass. That is why they are so paranoically suspicious of disorder in the periphery. But if a regime is paranoically suspicious of disorder in the periphery, that disorder pretty much always gets snuffed out, which is why I’m fairly sceptical of the “China plunges into chaos” scenario. 

DJ: Dambisa, to shift the focus to the United States, the other great power — you are very critical of the way American politics and society has developed in recent decades. You feel that it’s moving rapidly towards a European-style socialist welfare state system and acquiring all its concomitant problems. Then on top of that, there’s mismanagement of the economy, debt, and so on. Do you think the US will suddenly change course now that it faces this immediate  challenge?

DM: I certainly hope so, because the planet needs both the US and European countries working effectively. My book is not saying that this is the end of the West and we’ll all trundle along and it’ll all be fine without those countries. We need Europe and the US to do the right thing. With respect to the US, it is a great disappointment because over the last several decades, it has been absolutely consumed with politics, to its own detriment. If you ask Americans across the political spectrum what the main issues facing the country are, there is absolutely mass agreement — they all recognise that education has declined. Some of the statistics are shocking: from the OECD’s Pisa survey, or the Timss, look at the trends in mathematics and science, look at President Obama’s comments about the US going from number one in college graduates to twelfth. The new generation is the first generation whose education is actually worse than their parents’. So education is a serious problem, and infrastructure is a serious problem. The estimates coming out of the Engineering Society suggest that 30 per cent of America’s infrastructure is graded ‘D’: they need two trillion dollars over five years. We’ve got issues with energy — 85 million barrels of oil are consumed every day on this planet, 25 per cent of them in the US. The US is actually wavering in its own core values by engaging in oil trades with countries that have, at best, dubious political and cultural ethics — completely the antithesis of what the US claims to stand for. But there has not been a groundswell in the US to say that this isn’t what America believes. There is greater competition for resources, there are more people becoming more dependent on the state — some 45 per cent of Americans don’t pay federal tax. There is data that says that since 1980, the difference between public compensation and private compensation in the US is   at least 10,000 dollars. There are lots of statistics already indicating that we’re moving into a situation where the government is going to be much more of an allocator of capital and other resources. These are structural problems that have been ignored. I worry not so much that the US will become socialist per se, because clearly places like Germany and countries in Scandinavia have been successful with a mixed model. The problem is that it could end up as a model of socialism that happened by accident. If you look at the healthcare pension concerns, which we all acknowledge as a big issue, it’s virtually impossible to get a straight answer as to the exact number of pension liabilities the US faces. I have seen a figure of $2.5 trillion, but you hear of even bigger numbers coming down the pipeline. 

Politicians, not just in the US but across Europe, are rewarded for focusing on today’s short-term, tactical issues and voters respond to that. One of the assumptions of Ricardian equivalence is that people care about future generations so people behave in a certain way. But in reality we are incredibly myopic, governments in Europe and the US just can’t think beyond two years and unfortunately, the most intractable problems are longer-term, multi-generational problems. We as voters are simply not rewarding governments for focusing on those issues. Now I’m not proposing that Western countries become undemocratic, but I think there are a whole range of things you could do within a democracy: you could try to strip out the politics, you could end up with Mexican-style longer terms, say single terms of six years, which would give you a longer-term perspective to bring in to the policy-making. You could do what Obama has tried to do with his fiscal commission which is supposed to be bipartisan. I wouldn’t say it’s been a resounding success, but in terms of stripping out politics and focusing on big structural policies, that would be an idea. Or there’s the idea of incentives. The essence of Western capitalism is about creating incentives for people to do things, the innovators were incentivised to do that. And yet, over time, through guarantees and subsidies and the increase of the welfare state, we’ve seen people become less interested in taking up mathematics and science and become innovators. There may be ways to encourage people to become more incentivised to do the right thing. For example, you might have to pay people to take up maths and science. In Brazil and Mexico, for example, these programmes are working brilliantly and Bloomberg has a pilot programme in New York where you are essentially paying people to do the right thing: if a child has a 98 per cent attendance record, they get 100 dollars; if they are immunised against some disease the parent gets 200 dollars. It is a horrendous thing to suggest that we have to be paid to do the things you’d hope we’d do anyway, but I think we’ve reached a place where there just aren’t enough people doing maths and science, yet the future of these economies relies very heavily on research and development, and innovation. How are we going to get people into those industries as opposed to football, or appearing on The X Factor? That’s what I think the core issues are. 

DJ: Niall, you’re the historian. Have we been here before? Is this comparable to the 1930s when America went through another big crisis and one wondered whether it would ever re-emerge from it? Or is this something completely new, and is the situation here in Europe even worse? Is it conceivable that Europe could somehow pull itself up by its bootstraps, given that we can’t agree on even pretty trivial things that don’t matter to all this, let alone these very big issues? What is the historical perspective on this?

NF: Well, if you want to feel better as an American today, the first thing you should do is look at the 1930s because that was a lot worse. The policy response then was almost all disastrously wrong. We’ve learnt from those mistakes and the policy response to this financial crisis has been significantly more successful. It’s also worth looking at the 1970s to remind yourself that the US had another bad decade not so very long ago, which we lived through. Each time it bounced back. Even through the teeth of the Depression, American companies were innovating. General Motors and DuPont flourished in the 1930s, and Apple and Microsoft in the 1970s were founded in the depths of stagflation. So one obvious lesson from history is never write the United States off, even when things are looking grim, particularly politically grim. There are still innovators and entrepreneurs out there coming up with new companies at a faster rate than anywhere else. The problem in my mind in the US, and I agree with Dambisa 100 per cent on this, is a political problem. There is still a foundation of innovation and entrepreneurship like no other and so I go back to the great Churchill line: “America will always do the right thing when all the other possibilities have been exhausted.” I feel as if we’ll go through a painful process of failing to do the right thing until, as per usual, as with 9/11, as with Pearl Harbour, as always, a crisis will force the US at long last to do the right thing. That’s how these fiscal problems will finally be addressed. So, yes we have been here before and it’s not inconceivable that the US will come out fighting and that there will be another Reagan, or another great president who will lead America in the kind of direction that is implicit in much of what Dambisa writes about. 

DJ: That doesn’t sound like Obama to me.

NF: No, he’s clearly not that figure. Those of us who supported John McCain said Obama was more like Jimmy Carter and indeed, this is a Jimmy Carter presidency with much better presentational skills. It has the combination of economic malaise and foreign policy trouble, and I think further foreign policy trouble is going to come thick and fast. It’s clear that the United States, because of its financial crisis, is going to have to cut back, and cut back seriously, on its overseas military expenditure. So we have two bumpy years ahead in Afghanistan and Iraq and the rest of the world will see these as symptoms of American decline, and they will be; but the key thing to remember, going right back to the beginning of our conversation, is that history is not cyclical. Repeat after me: history is not cyclical. Empires can have bad decades and can come roaring back just as the British Empire did after the 1770s. The other point I would make by way of historical analogy is a different one. 

In many ways, this situation reminds me of a hundred years ago. A hundred years ago, there’s a complacent, English-speaking empire that seems to be the hyperpower. The general view is that the sun will never set on that particular empire, not only literally but also metaphorically. There is a rapidly industrialising rival, gaining fast — indeed overtaking — in terms of output, and this rival has a distinctly different set of political values. I’m talking about Britain and Germany, of course. There are some very interesting parallels to be drawn there. There’s an economic symbiosis in both cases. The relations between Britain and Germany were deeply, deeply intertwined and yet they came to strategic conflict. My slight anxiety about what I’ve called “Chimerica”, that fusion of the two economies, is that it too could blow up quite quickly into a strategic conflict. While they are intertwined economically, they are not intertwined strategically. There are indeed points of conflict which are quite easy to think of right now, of which North Korea is the most worrying. So that’s the historical analogy I find most helpful and in that analogy, it is much less certain that the US bounces back, because if it comes to a protracted conflict — not a cold war or hot war, but some kind of strategic rivalry — then it is very hard for the United States to come out as the winner. 

DM: And they’ve lost a lot of friends internationally. The Chinese now, very cleverly, have got many other countries around the world, from Australia — which is, by the way, the largest recipient of direct foreign investment from China — all the way through to Africa and South America to be onside with China. But the other thing that makes this time slightly different is that you really have a credible competitor, a credible alternative model. The greatest concern the Chinese have is the race against revolution, but that’s a domestic revolution that is, to me, economically led. Of course, there are issues of culture and religion that Niall talked about which are interesting, but my sense, from being in Beijing and Shanghai recently, is that people have put aside their concerns about democracy in the interest of Maslow’s hierarchy of needs: food first, we can talk about everything else later. It may seem rather simplistic but there are a number of Chinese journalists — diehard supporters of a democratic regime — who will say they absolutely despise the communist system. Yet there are just not enough people who prioritise political change. What they care about most is getting on the economic ladder and that is the big challenge for the Chinese government. The new game involves a real, credible competitor to the US, which the US, like many other countries around the world, is in hock to through the massive amount of debt that it owes. It will have to cut its nose off to spite its face to get out of that trade relationship and I think they’re too far gone.

DJ:  Niall was referring to America’s military strength. You mention in your book that the United States basically has paid for the rest of the world to have peace since 1945. It initiated the dismantling of the communist bloc in eastern Europe, it paid for Western Europe’s defence, kept the sea lanes open, provided all the research and development. It’s been subsidising everybody else. You argue that that’s got to stop, that they can’t do everything. In that case, it’s a scenario of the US drawing in its horns, not quite being isolationist, but at least refusing any longer to promote its ideology of democracy and freedom. Where does that leave the rest of world? We haven’t talked about India, which is a huge subject. The Indians think they are going to overtake the Chinese.

DM: Well, they have got demographics on their side. 

DJ: So perhaps it’s wrong of us to focus exclusively on China. But if America follows this prescription, what happens to the rest of humanity?

DM: It’s in the world’s interest for the US and Europe to get it right. By that I mean that they continue to be the leaders of innovation and technological development because they are the leaders now — the places where the most entrepreneurial spirit and innovators are. 

DJ: But also human rights and democracy.

DM: Absolutely, but I simply do not think you can shoehorn democracy and governance into countries. Africa is a classic example of this. The 1980s saw a big groundswell for democracy and the big aid push: the attempt to link aid to democracy. I don’t think you can do that. You need to get the economics right. That is what people will rally around. It doesn’t matter if you’re in Rwanda and you’re Tutsi or Hutu, you will clash if you don’t have something in common, and economics is brilliant at giving people something in common. We all want the same thing: we want our children to have good lives, to have clean water, roads and so on. I  think the big mistake has been trying to superimpose political systems when you don’t have a critical mass, a middle class on the ground who are able to hold governments accountable. We’ll see how that plays out in China. 

Part of the problem is that over time the US is going to have to decide what to do in terms of underwriting public goods. Now there is a view out there that says the US is actually providing employment by having all these military people in Iraq and Afghanistan but I just think American society is going to have to make a decision between underwriting global goods and improving its own education. That is something for the American public to decide. I don’t know when the last gong will be heard and people realise how bad the educational standards have become. 

DJ: One final question to you, Niall. You talk more in your book than Dambisa does about Islam and why Islam didn’t make it in the way the West did as a kind of matrix for the take-off. But Islam today is very dynamic, demographically and culturally too. It is very assertive and becoming more and more significant here in Europe. How do you see that playing out? Is it not conceivable that if we look a few decades ahead we will have by then China, a very wealthy but also somewhat stagnant society, while all around it are rapidly growing Islamic countries?

NF: This is a hugely important issue and it means we’ve just got to take a couple of steps back and look not just at a world of economic giants but also demographics and cultural dynamics. Sam Huntington had some things wrong in his Clash of Civilizations but he had more right than almost all the other post-Cold War commentators. The vision of the future that we got from Brzezinksi or Fukuyama or Mearsheimer was actually a less accurate vision than the vision in the Clash of Civilizations. And I think that core notion,  that after the Cold War there’s Western civilisation — although I feel that’s two civilisations as Europe and the US drifted apart — there’s China, and then the other big player will be Islam, is about right. 

Islam too has its schisms but there’s no question that the demographic trend is its friend and that the ideological trend is its friend. If the Chinese don’t believe in anything other than that the markets are better cats for catching mice than the Plan, and if the Europeans don’t believe in anything at all, except maybe that celebrities are important, and the Americans believe in a WalMart-style religion where you go to God for whatever personal problem you want to have solved, the Muslims have the advantage of belief in one of the world’s great monotheistic religions — a fervent belief in many cases. This might be really rather critical in how things unfold in the 21st century. If there’s one thing that unites the US, India and China, it is hostility to radical Islam. And if there’s one thing preventing there being an Anglo-German antagonism, it is recognition of that common factor. The Russians, of course, should be added to that list because they share that antipathy, and in many ways they’ve taken even more hits. You have a possibility, which we need to take more seriously, that these different, organised civilisations with their great powers end up having to unite because the less well-organised but demographically dynamic and ideologically highly motivated Islam poses a challenge to them all. 

If you go one way from Beijing to the United States there’s not much but sea. If you go the other way it’s a different story. The lands in between have been the principal strategic preoccupation of the US and that is where the US has spent its manpower and treasure now for years. I think that will change. The US cannot afford to police the greater Middle East, and the neoconservative experiment has to be judged on balance a failure, or a success too expensive to be sustained. That leaves a very big vacuum. 

I remain of the view that if you take economic volatility, ethnic disintegration, and an empire in decline you have a recipe for trouble. As the US retreats from the greater Middle East — which it must for the reasons Dambisa has given — it is not going to give way to some period of peace and love and harmony. On the contrary, I think we’ll see a much higher level of violence than we’ve yet seen. Stakes will be very high, not least because of the commodity scramble, and I think how that plays out will determine whether the 21st century is the century of Sino-American antagonism or the century of something different, something more Huntingtonian, to which in fact radical Islam is the question and Chimerica turns out to be the answer.

DM: In the interest of harmony, prosperity and global peace, I really hope that the West focuses on its own issues as an urgent priority, rather than focusing instead on what China is doing. 

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