Economic historian Niall Ferguson contrasts Europe and China in today’s LA Times.
EUROPEAN UNION finance ministers went to China last week. Their trip may shatter the complacency that seems to pervade European capitals these days. “Wake up and smell the coffee” is what we like to say here in the U.S. when we encounter complacency. But it’s the Chinese green tea that the Europeans need to wake up and smell….
Today, as a result of reforms dating to the late 1970s, China has the most dynamic economy in the world and quite possibly in all history. Europe, by contrast, is fast becoming the “sick man” of the developed world — a title held until recently by Japan.
Over the last decade, according to the International Monetary Fund’s latest World Economic Outlook report, growth in the core economies of the EU that make up the Eurozone has been a sluggish 2% per year. Growth in China has been more than four times faster. In dollar terms, China’s gross domestic product is already about one-fifth the size of the Eurozone. Project those growth rates forward and China could overtake the Eurozone within 30 years.
Europe’s sluggish growth is only one of several reasons why China’s leaders rank the EU significantly behind the United States in the global pecking order. Leave aside the two other big reasons, lack of military clout and lack of significant energy reserves, both of which make Russia seem more important to Beijing than Europe. And purely as a potential market for China’s exports, Europe seems less promising than China’s own Asian neighbors.