What is happening is so extraordinary that economists have had to invent a new word for it – this is not an economic cycle, but a supercycle, a shift in the world economy of historic proportions.
When demand increases and supply stands still, prices shoot up. Iron, wheat and oil are all at record prices, despite slackening demand in the faltering Western economies. The cost of living in Britain is now rising faster than wages, making the British on average poorer year on year.
Asia’s expansion means that its influence is starting to be felt more directly around the world. Asian countries are not just buying up foreign raw materials, but as their companies try to become global leaders, they are buying up Western companies. It is not just Land Rover, Jaguar and MG Rover. The Malaysian company Proton owns Lotus. Indian company Tata owns Corus, once British Steel, as well as Tetley Tea.
The hunger for raw materials is also making China lose its shyness and venture out into the world. Like Germany and Russia, China has traditionally been a land empire, focusing its expansionist energies on countries it had borders with, and it eschewed the world-conquering exploits of Europe’s sea-faring maritime nations. Europeans have, for half a millennium, been unchallenged as the global colonisers, but last month the respected Economist magazine dubbed the Chinese “The New Colonists”.
While the Congo in central Africa was once over-run by Belgians, it is now the Chinese that can be found wondering around its mining belts…