| Countries' dominance go in cycles. At one stage, the British Empire had the strongest military in the world, cutting edge technologies, and strong companies. Some may forget that Britain was once described as The Sun Never Sets On The British Empire". Then during the 1920s Britain over extended itself militarily and in order to pay for its imperial conquests resorted to debasing its currency and running continuous trade and budet deficits. In other words, Britain was a savings short, net "debtor" nation, and the rest of the world was financing her (sounds familiar?).
Meanwhile America was running trade surpluses and was a net "creditor" nation during the 1920s. The US has had deficits before but "never" closed to 6% of GDP which is where it is now. By the way the US is now a net "debtor" nation just like Britain was in the 1920s. The same process happened hundreds of years ago before Britain involving the great Roman Empire, the Greek empire. Nothing is permanent. I agree that China is governed by a totalitarian government and lack certain freedoms. That's why I think the change and transition of China will not be a smooth one and there may be both economical and political booms and busts. From an investing point of view, when things become the glommiest in China, when it is no longer touted as a "growth miracle", and when foreign investors have abandoned China, thats the time to invest. The secular ascendency of China is firmly in place. The US went through the 1920s depression but they emerged as the undisputed world superpower afterwards. A smiliar process may happen to China. |
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