World Order Is All About China and Europe - by Ruchir Sharma
a new world order has been in the making, defined by China's growth surge and a European economic renaissance. At just under $3 trillion, the Chinese economy in nominal terms is still less than a quarter the size of the U.S. economy. But with a pace of expansion now more than four times that of the United States, China is incrementally adding more to global growth than the U.S. is. The even bigger surprise is the German-led revival of Europe's economy. Last year the euro zone grew by 2.6 percent, spurred by a 3 percent rise in Germany. An intense focus on increasing productivity has helped Germany's export sector become highly competitive, and it is now benefiting from booming demand in emerging markets. With projected growth for 2007 in the 2.5 to 3.0 percent corridor, Euroland will likely outperform the U.S. economy for the first time in recent history.
If the U.S. lapses into an outright recession, the impact may still be large enough to unravel the global economic story. But any scenario less drastic than the dreaded recession now looks manageable, with the euro area and China together accounting for a larger share of global GDP than the United States. Almost effortlessly, it seems, the world has escaped its risky dependence on U.S. economic power.
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