Reasons to be cheerful as we welcome 2014
Pessimists have an aura of wisdom; optimists risk looking naive. There is a natural temptation to err towards gloom when surveying the prospects for a new year, especially when the centenary of global catastrophe provides a reminder of the perils of cheerfulness.
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Yet there are good reasons to believe that the world turned a corner of sorts in 2013 and most of our fellow human beings will probably become safer and more prosperous in 2014.
Twelve months ago, America was deep in a malaise of its own making, wrestling with a stagnant economy, spiralling debt and gridlocked politics. Today, the innovative dynamism that has always been the superpower’s most salient characteristic is showing through once more: nine of the world’s 10 biggest companies are American again (in 2009, the figure was only three) and economic recovery is finally cleaning up the fiscal mess.
Last year, this newspaper identified public debt of 103 per cent of gross domestic product as the single greatest threat to America’s pre-eminence. At the start of 2014, the tide has turned and the burden has fallen to 99 per cent – not a huge reduction, but not bad either given that hundreds of billions of dollars are involved.
True, America’s politicians deserve little praise: President Barack Obama and his opponents in Congress are paralysed by partisanship. Instead, the entrepreneurial zeal of US business and the success of quantitative easing by the Federal Reserve have driven this recovery.
But the upshot is clear: one way or another, America will probably contribute more than China to global economic growth in 2014.
And that highlights what may be an intriguing theme: the long-established trend whereby relative power and wealth shifts from West to East may come to a shuddering halt in the year ahead.
For the first time this century, America, Britain, Japan and Germany are forecast to add more to global economic growth than the once booming foursome of Brazil, Russia, India and China.
Does this mean the West will seize back its post-Cold War dominance? Not quite. China’s economy will probably still expand by a good seven per cent. No one doubts that President Xi Jinping leads one of the world’s great centres of power.
The point is that China is unlikely to do better than last year, meaning that its overall contribution to world prosperity will stay unchanged. Instead of the rapid transformations that we have been schooled to expect, the global balance of power could actually stay pretty constant in 2014.
On the whole, that will be good news for anyone who believes that American leadership helps to guarantee a safer world. We will doubtless be regaled with comparisons with 1914, casting China as Wilhelmine Germany and America as Asquith’s Britain.
The maritime disputes of the China Sea will be superimposed on the Balkans of a century ago, supposedly providing the tinderbox for global conflagration. But these parallels are unconvincing. A century ago, Germany had already surpassed Britain’s economic might; China, by contrast, is a generation away from doing the same to America.
Germany’s brand of diplomacy succeeded only in making enemies of most of Europe: the Kaiser’s perverse achievement was to unite the Great Powers against him.
China is unlikely to repeat Germany’s singular irrationality. Yes, Beijing is locked in dispute over sundry island chains. True enough, the Senkakus (Japan’s name), or the Diaoyus (China’s parlance), fall under Washington’s security treaty with Tokyo, meaning that any Chinese bid for them would risk war with both Japan and America. No doubt Mr Xi is capable of mistakes, but he would have to be monumentally foolish to choose such a course.
If the global balance remains intact and China avoids coming to blows with its neighbours, those facts alone will create the space for hundreds of millions of people to improve their lives. But there will, as ever, be dangerous exceptions to a benign trend. In the Middle East, Syria’s civil war will enter its fourth year in March.
The moment when Western intervention might have toppled Bashar al-Assad’s bloodstained regime without unleashing anarchy has passed. Now there is little we can do, save provide aid and await the day when all parties come to their senses. Meanwhile, thousands of Syrian refugees are arriving in southern Europe, showing how conflict remains a key cause of immigration into all rich countries, including our own.
Elsewhere, Afghanistan – that other graveyard of Western hopes – will see the final withdrawal of foreign forces, testing whether any of their achievements can be sustained. Europe, for its part, is now divided between a stagnant eurozone and steady recovery in those countries fortunate enough to be outside.
Britain is in the lucky category and our economy is likely to outperform our neighbours in 2014. We also have a stake in America’s leadership and Asia’s success. As such, we should be part of the benign trends of 2014. On balance, we can safely feel cheerful.