Shortly after saying that the world is already watching the decline of the Chinese economy, George Friedman freed the audience to laugh. And many of those present at the World Government Summit in Dubai this Tuesday (29) laughed.
One of the leading analysts of geopolitics in the US, Friedman, 73, argues that, in the next 50 years, Beijing will undergo a process of diminishing its global influence, as has happened with other powers – the Americans in the Great Depression, in the 1930s, and the Japanese, in the 1990s. For him, before seeing their economy collapse, countries experience decades of great prosperity.
And in the past, he says, those who saw this scenario were also laughed at. But Friedman just got it wrong. To clients of his consultancy, Geopolitical Futures, he wrote an apology for not having foreseen that Russia would invade Ukraine, as happened on February 24. Few predicted.
Despite the mistake, betting that Vladimir Putin would not enter a war in Eastern Europe was the most obvious guess, and Moscow’s unexpected difficulties in delivering significant victories show that the Russian president’s choice was probably not the best choice. For Friedman, the conflict with Kiev has revealed that Russia is no longer a major power and that its economy is shrinking.
“Its military has shown itself incapable of properly planning the execution of a war with a country as weak as Ukraine. We also know that the Russians cannot survive the sanctions imposed on them without stumbling,” said the analyst, who participated in two panels this week. Tuesday.
Before giving a 20-minute speech, Friedman was part of a table with Anwar Gargash, foreign policy adviser for the United Arab Emirates, Frederick Kempe, CEO of the American think tank Atlantic Council, and Pippa Malmgren, a former adviser to George W. Bush, American president between 2001 and 2009.
Invited to talk about the world in 2050 and the characteristics of new emerging powers, Friedman dedicated himself more to talking about the importance of technology in geopolitics. To this end, he recalled something obvious: wars cause humanitarian crises, deaths and injuries, but they are also a source of innovation, because they face military problems, whose solutions are later absorbed by the private sector.
Without dwelling on the theme that gave its name to the panel in which he was the protagonist, he bet on Poland, Turkey and Japan as candidates for powers 50 years from now. The inclusion of Tokyo, now the third largest global economy, shows that even countries that suffered severe crises a few decades ago can reverse the situation. To some extent, the bet contradicts the pessimistic opinion about China.
Friedman’s skepticism about Beijing had already been expressed in an analysis of his consultancy in October. In the text, he says that Chinese policies are shaped more by the state than by the market and that the government should make long-term decisions “regardless of short-term pain”.
Friedman also cites in the article the Belt and Road Initiative, leader Xi Jinping’s largest foreign policy program, with large loans to build infrastructure in emerging countries, especially Africa. “Over the years, that route hasn’t fully materialized. But what did materialize was a system of financial dependencies that made China look a lot richer than it was. Money buys friends. But loans often have to be repaid, and many beneficiary countries are so indebted that they are having a hard time settling accounts,” he wrote.
In the same vein, he recalled this Tuesday that the Chinese economy is 35% made up of real estate and that “we are seeing Chinese companies starting to default on their debts”, as happened with the rumored case of the developer Evergrande, whose bankruptcy risk brought down bags around the world.
Still in the economic field, the analyst saw the American reaction to the conflict triggered by Russia as a sign that “the power of the dollar was in plain sight”, in a reference to the effects of the sanctions that took Moscow out of the international payment system. “It crushed Russia’s ability to wage war, because wars are expensive. The US discovered that it could have a war without shooting.”
What remains to be confirmed is how Europeans, dependent on Russian gas and oil, will behave in the face of Moscow’s demand that items now be paid for in rubles, not dollars.
In any case, unlike what happened in February, when Friedman fell from his horse in the face of Moscow action in Ukraine, predictions about the future of the Chinese economy will still take at least 28 years to be checked. Then we’ll know who had the last laugh.
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