BRIC Hallucination: China Won’t Be Engine of New World Order, nor Russia, nor India
In the New World Order, the BRIC nations – developing nations – are to be the engine of global growth. That is at least what officials from the foremost global institutions have maintained all along, divorcing their narrative from the other, more populist narrative of just what the ‘New World Order’ is. That the ‘New World Order’ is not a standardization of the world system of financial governance, but, instead, merely a shift of power away from the North to the South has been the storyline given from technocrats, politicians and banksters through the entire crisis since 2008. But, as the crisis wears on and reveals itself to be globally systemic and evasive in nature – endemic to globalization – the future takes on a different aura.
For instance, Caroline Anstey, managing director of the World Bank, claims that “the North no longer offers the model for development, it’s much more about South to South.” But also that “It’s still a volatile world and it’s a world in which we have to live with expectations of volatility.” But is Anstey’s understanding of the New World Order reality-based? Increasing reports from China – from monumental QE to megacity collapses – portend a much different picture for the future of global geopolitics and socio-economics. A future much less defined by any nation-states at all, and much more by global institutions.
Goldman Sachs foresees this new order as something different than Anstey. Goldman expects China’s economy to grow at a much slower pace of about seven percent over the next decade, although its stock market still has the most attractive upside among the BRIC countries, especially as China embarks upon record quantitative easing.
“China is in the early stages of going from a long period where it was all about the quantity of growth, into an era where the focus is on the quality of growth,” Jim O’Neill, chairman of Goldman Sachs Asset Management, told a news conference in Singapore.
O’Neill acknowledges this is a reality that markets have yet to factor in concerning the next decade of slower growth for the world’s second largest economy. The last three decades saw annual growth in China at 10 percent. Today, China’s government is attempting slower and lower growth so as to give it time to complete structural economic reforms.
“We’re all used to the drug of 10 percent growth and those days are behind us,” said O’Neill.
China’s economy is expected to struggle in the near-term, according to Goldman Sachs, and the slowdown likely spread into the most recent July-September period, meaning seven consecutive quarters of slowed growth in China.
“It’s too soon to say a clear recovery is on the way. The Chinese economy still seems to be softening and it’s possible that the economy may be weaker in Q3 than it was in Q2,” O’Neill said. ”There are not many signs yet of a big easing in financial conditions, which usually is a good leading indicator of momentum.”
China is not the only BRIC nation facing a slowdown. Goldman Sachs anticipates all “BRIC” countries, with the exception of Brazil, to see lower growth than they did in the last 10 years. Goldman does expect these countries to slow slower than the traditional core of civilization, the west, as their collective share of the world economy is still expected to increase.
Wealth redistribution. Certainly not a synonym of global recovery or global power shift. Merely, rather, an evening of the playing field. And this evening of the playing field is sure to transpire in the shadows of global institutions that have maintained in a new world order developing nations will take the lead. This is a divide-and-conquer play exploited by the World Bank and International Monetary Fund. While policymakers and the public of the nations squint their eyes at each other on the field, the internationalists sit comfortably from the stands sipping iced tea and nattering about prospects for global “growth.” The BRIC nations, in terms of how they originally were envisaged at the onset of this crisis, is a thing of the past.