This week, I received an e-mail from a friend in Tokyo tagged: “Greetings from Number Three, Japan.” He was mourning the passing of an era.
The quarterly numbers he was alluding to suggest that, even in dollar terms, China is now the world’s second-biggest economy. There it will remain until, catastrophe or stagnation aside, it overtakes the US to become Number One.
Dollar comparisons are pretty arbitrary, as much influenced by currency fluctuations as by economic activity. They do not take into account that it is much cheaper to buy a house, a meal or a foot massage in Beijing than in Tokyo. In purchasing power terms, China’s economy surpassed Japan’s nearly a decade ago. But symbolism counts. And by that measure, China’s usurpation indeed ushers in a new order. For the first time since 1968, when Japan overhauled the then West Germany to become the second-largest capitalist economy, there is a new pretender to the US throne.
In recent months, as Asia has weathered the financial crisis better than the West, and the Obama administration has taken a deferential approach toward China, numerous new books have declared that, finally, this will be Asia’s era. From Martin Jacques’ When China Rules the World: The Rise of the Middle Kingdom and the end of the Western World to Kishore Mahbubani’s slightly older The New Asian Hemisphere to the recent cover story in the Atlantic Monthly by James Fallows, which compared China’s gleaming infrastructure to America’s potholed roads and horrendous cell phone coverage, the Asia cheerleaders are out in force.