Can Korea Play Bridge Role for Chimerica ?
By Kim Jae-kyoung
Staff Reporter
The year 2009 will be a landmark for Korea, as well as the world, as it's expected to be a critical turning point when the balance of global power shifts to the East from the West.
In recent years, U.S. hegemony has been gradually eclipsed by the rise of China, and in the aftermath of the Wall Street crisis last year, the Pax Americana political world and economy is being slowly shifted to a Pax Sinica system.
For Niall Ferguson, a world-renowned history professor at Harvard University, the era of Pax Sinica is not a matter of choice, but a matter of time and destiny. He stressed that during the course of power transition, South Korea should play a broker's role between the two superpowers for survival.
``South Korea is in a strong position to act as a bridge between the U.S. and China. For historical reasons, it can do so much more easily than Japan,'' Ferguson said in an interview with The Korea Times.
``There is still huge animosity against Japan in China, whereas Korea was also a victim of Japanese imperialism,'' he added. ``The big issue for South Korea must be ensuring that the reunification of Korea has China's blessing, just as the Germans sought Russia's blessing for reunification in 1989-1991.''
Ferguson, who coined the term Chimerica, a fictional combination of China and America, said that the U.S. credit crisis will advance the era of Pax Sinca.
``How early China will dominate the global economy depends on how quickly the U.S. recovers from the economic consequences of the financial crisis and on how successfully China copes with the social consequences,'' he said.
``If U.S. growth slows to around one percent over the next five years and China maintains over six percent, then there's no question that China overtakes the U.S. even sooner than Goldman Sachs has projected,'' he added.
According to a Goldman Sachs report in 2001, China was projected to overtake the U.S. in gross domestic product (GDP) in 2040. Its latest projection released in July, however, has brought the projection forward to 2027.
He pointed out that this (global power shift) will mark the end of an era in which the rules of the global economy were essentially set by a democracy committed to free trade and capital movement.
``From now on the rules will have to be made in partnership with a non-democracy that likes to bend the rules on trade and maintains capital controls,'' he said.
Ferguson said in September that with China decoupled from the U.S. ― relying less on exports to America and caring less about the yuan's peg to the dollar, the end of Chimerica seems nigh, suggesting that an era when China will dominate the world order is around the corner.
Niall Ferguson is a professor at Harvard University and Harvard Business School, a fellow of Jesus College, Oxford, and a senior fellow of the The Hoover Institution on War, Revolution and Peace, Stanford.