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China eclipses the Japanese economic miracle

14 February 2011

9:08 AM

14 February 2011

9:08 AM

Official figures suggest that China has replaced Japan as the world’s second
largest economy, after an estimated 10 percent growth rate left China with an economy worth close to $5.8trillion at the end of quarter four 2010. Japanese growth hovered around the 3 percent mark
in 2010 with a total GDP value of $5.47 trillion. Analysts have
told the BBC
that it is ‘realistic’ that China will overhaul the US’ economy in about a decade, which, as Pete has demonstrated, does not look too outrageous a suggestion. 

All of this puts me in mind of the European Union. The CIA World Factbook records that the EU leads
the globe in GDP (purchasing power parity): with an estimated value of $14,890,000,000,000, against the US’ $14,720,000,000,000.


So, there is collective strength in the Old World yet, and so much of Eastern Europe’s markets remain underdeveloped. But, the Union is mired at present. Competition, or rather the lack of
it, is the problem, not least because the Commission and member states have conceived different solutions. As Fraser and James noted in their respective Sunday columns, the Commission continues
to regulate, micromanage and interfere in the economic interests of member states. But, far more worrying, the Commission is intent on economic protectionism (putting up tariffs and so forth),
which Vince Cable has decried. Oliver Letwin’s ‘contraceptive commission’ is
another welcome step against excessive regulation.

Resistance exists beyond Britain’s parochial concerns. Across the Continent, there is growing determination to liberalise; one reason why relations between Cameron, Merkel and Sarkozy are
more than cordial. Euroscepticism is also rife among those small countries affected by the sovereign
debt crisis. Behind closed doors, member states plan limitations on the EU Commission, the EU Parliament and ‘The Project’ in general, all of which were emboldened by the Lisbon Treaty.
At the moment governments are picking fights over expansion (especially in the Balkans) and the next EU budget round, whilst also rejecting regressive tariff reform and other illiberal measures
such as caps on pay. Some also hope to restrain the remit of the Social Chapter and curb central bank governance, but these are pipe-dreams as yet. 

There is, of course, a long way to go, notably on the anti-competitive CAP, entrenched unemployment and welfare dependency. But, to adopt a phrase, change is coming to Europe. It has to.


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