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Chase Bank Limits Cash Withdrawals, Bans International... Before you read this report, remember to sign up to for 100% free stock alerts Chase Bank has moved to limit cash withdrawals while banning business customers from sending...

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Richemont chairman Johann Rupert to take 'grey gap... Billionaire 62-year-old to take 12 months off from Cartier and Montblanc luxury goods groupRichemont's chairman and founder Johann Rupert is to take a year off from September, leaving management of the...

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Cambodia: aftermath of fatal shoe factory collapse... Workers clear rubble following the collapse of a shoe factory in Kampong Speu, Cambodia, on Thursday

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Spate of recent shock departures by 50-something CEOs While the rising financial rewards of running a modern multinational have been well publicised, executive recruiters say the pressures of the job have also been ratcheted upOn approaching his 60th birthday...

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UK Uncut loses legal challenge over Goldman Sachs tax... While judge agreed the deal was 'not a glorious episode in the history of the Revenue', he ruled it was not unlawfulCampaign group UK Uncut Legal Action has lost its high court challenge over the legality...

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Davos: the failures’ club | Editorial

Category : Business

World Economic Forum has taken on a less triumphalist tone since the boom years of the nineties and noughties – and it is nowhere near a solution to the world’s problems

Davos used to be the winners’ club. Throughout the boom years of the 90s and noughties company chief executives would gather every winter high up in the Swiss Alps to discuss in a lordly fashion the world economy and how it could be revised to suit their objectives and views: more globalised, more marketised. But in the five years since the collapse of Lehman Brothers (whose boss Dick Fuld was a Davos regular), the World Economic Forum has taken on a necessarily less triumphalist tone. It might now be called the failures’ club. Not the losers’ club, you understand: even amid the slump, the wealthy continue to do rather well – as evidenced by Berkeley economist Emmanuel Saez’s finding that the top 1% of Americans saw their incomes grow by 11.6% in 2010, even while incomes for the bottom 99% rose only 0.2%. But the economic model pined after by the Davos set is now bust; any lasting fixes or reforms will have to come from very different places and perspectives.

No doubt Klaus Schwab and his WEF guests are at least partly aware of that. True, the Davos gatherings may bear the same foot-dragging titles as ever (This year’s being “Resilient Dynamism“, whatever that means) rather than the more appropriate “We Got It Wrong”. But the usual mix of businessmen (four out of five delegates are male) and financiers and government ministers is now spiced up with trade unionists, anti-poverty campaigners and dissident economists. Sure, this must be an attempt to borrow credibility, but it is also a stab at greater plurality. Yet clubs – which is what the WEF is, formally – are inherently unplural things, especially Davos, which charges £45,000 for basic membership and one-time entrance and £98,500 for access to its private sessions. It is all very well for Mr Schwab to inveigh against inequality; it would be more meaningful if he pushed the bosses at Davos to sign a joint promise to limit pay gaps in their own companies. Fat chance of that.

And yet the agenda of extending markets and stripping workers of pay and conditions pushed at Davos (and by countless other organisations, such as the IMF and the eurozone) is finished. Five years on from the Wall Street crash, the world economy is still palsied. The GDP report released in the UK this Friday will underline the mess made by the austerity-pushers, just as much as the economic wreckage on show in Greece, Spain and Portugal. And the latest indicators of slowing expansion in China should put paid to any vain hopes that other cylinders in the world economy would kick in. The only way out of the doldrums will be for the west to accept that this is a crisis of demand, rather than supply – one that can only be countered by big spending on jobs and raising wages. Again, there is little chance of such solutions emerging from the Davos set, or of serious proposals for real industrial policies.

But there is a more fundamental problem, too. The programme of corporate-led globalisation pushed by multinationals is surely also exhausted. The term “Davos man” was coined by the political scientist Samuel Huntington. According to him, the members of this global elite have “little need for national loyalty, view national boundaries as obstacles that thankfully are vanishing, and see national governments as residues from the past whose only useful function is to facilitate the elite’s global operations”. Yet in the crash, it was governments that had to step in and bail out their national banking systems – and then try to reflate their domestic economies.

And as this era becomes more clearly revealed as one where economic growth is scarce, we can expect countries to try to export more and more to other nations. This is what lies behind the talk of “currency wars” and “trade wars” – and it is only just getting going. There will surely be much more naked mercantilism on display in the next few years. The Davos set will oppose much of this. But by pushing a phoney, inequitable globalisation, they have created the conditions for the backlash against their own ideology.

World Trade Organisation’s new boss will face an in-tray filled with problems

Category : Business

This month, the Geneva-based trade body will start the hunt for a new director general, but is the decline of globalisation making it irrelevant?

At an elegant 1920s building set in a lush park on the shore of Lake Geneva this month, nine senior global politicians – six men and three women – will be attending an extraordinary job interview. The World Trade Organisation, once the hated target of anarchists and anti-globalisation protesters furious about unfair rules and backroom deals that locked poor countries out of the world’s markets, is seeking a new director general.

Yet few angry campaigners are expected to throng the centre of Geneva on 29-31 January, as the candidates file into the WTO’s headquarters to set out their vision for the future of the global marketplace. More than five years into the financial and economic crisis, the once-hot topic of “globalisation” is no longer where the action is.

“The WTO has lost an incredible amount of sex appeal,” says Ricardo Meléndez-Ortiz, chief executive of the International Centre for Trade and Sustainable Development, a Geneva-based thinktank.

In 1999, when a WTO meeting in Seattle was brought to a halt by street riots, it was the focus for protesters’ rising sense of injustice about the impact of globalisation on the world’s poor. Yet 14 years later, many of the most fraught issues rocking the world economy – on tax, on immigration, on exchange rates – are being fought out far from Geneva. And there are signs that aspects of the “globalisation” that was the WTO’s raison d’etre are being quietly unpicked.

The WTO, which polices international trade law as well as being a forum for negotiations, is having to arbitrate a growing number of international disputes, as the temporary truce called for by the G20 countries in the depths of the financial crisis gives way to a more fractious climate.

China and the US, for example, are battling each other over allegations that China unfairly subsidises its solar power industry. At the same time, multinational firms are beginning to reverse the relentless process of outsourcing, which has seen supply chains stretch out across the globe.

Meanwhile, the increasingly powerful emerging economies, burned by the experience of the financial crisis, are asserting their right to protect themselves against the surges of “hot money” that leave their economies vulnerable. Brazil, for example, has used taxes on foreign exchange – anathema in the days of the so-called Washington consensus – to try and stem the appreciation of its currency, the real.

“The days of expecting a lot out of outsourcing are gone,” says Simon Evenett, professor of trade and development at St

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China will be dominant economic power by 2030, says NIC report

Category : Business

No state will replace US militarily, says National Intelligence Council, but climate change will create great instability

A US intelligence portrait of the world in 2030 predicts that China will be the largest economic power, that climate change will create instability by contributing to water and food shortages, and that there will be a “tectonic shift” with the rise of a global middle class.

The National Intelligence Council’s five-yearly Global Trends Report says the world is “at a critical juncture in human history”. It says US power will be greatly diminished but no other individual state will rise to replace it. “There will not be any hegemonic power. Power will shift to networks and coalitions in a multipolar world,” the report says.

It draws a distinction between what it calls “megatrends” – things that are highly likely to occur – and “game-changers”, which are far less certain.

Among the megatrends is growing prosperity across the globe.

“The growth of the global middle class constitutes a tectonic shift: for the first time a majority of the world’s population will not be impoverished, and the middle classes will be the most important social and economics sector in the vast majority of countries,” it says.

With spreading prosperity will come shifts in influence and power. “The diffusion of power among countries will have a dramatic impact by 2030. Asia will have surpassed North America and Europe combined in terms of global power, based upon GDP, population size, military spending, and technological investment. China alone will probably have the largest economy, surpassing that of the United States a few years before 2030,” the report says.

The megatrends also point to increased instability because of increasing demand for insufficient supplies of water, food and energy compounded by climate change.

“Demand for food, water, and energy will grow by approximately 35, 40, and 50% respectively owing to an increase in the global population and the consumption patterns of an expanding middle class. Climate change will worsen the outlook for the availability of these critical resources,” the report says.

The report says that a world of scarcities is not inevitable but “policymakers and their private-sector partners will need to be proactive to avoid such a future”. It says any solution will require more able countries to help more vulnerable states.

The globalisation of work – and people

Category : World News

The globalisation of work and people

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Europe’s secondhand clothes brings mixed blessings to Africa

Category : Business

Roaring trade in often smuggled charity castoffs in African street markets risks ruining domestic textile industries

As a boy growing up in Sierra Leone, Kemoh Bah prized his Michael Jackson T-shirt. “I was the only one who had this kind of T-shirt in my village, and I felt like I was part of American culture,” said Bah, dressed head-to-toe in clothes emblazoned with logos outside his roadside secondhand clothes shack in the capital, Freetown.

Nicknamed “junks” in Sierra Leone, hand-me-downs account for the majority of outfits in a country where seven out of 10 people live on less than $2 a day. The industry has ballooned to $1bn in Africa since 1990. And yet the combination of western charity and African brand enthusiasm is not always a force for good. Quite apart from the ethical issue of donated goods becoming tradeable commodities on which middlemen can turn a profit, there is the threat to local textile markets to consider.

About a third of globally donated clothes make their way via wholesale rag houses to sub-Saharan Africa, where they end up lining the streets or filling small boutiques. Hawkers say Christmas time, when westerners flock to offload clothes to charity shops, brings in the biggest bales. The lucrative industry has even spawned fake charity clothes collectors in the west.

But critics say the billion-dollar trade risks swamping fragile domestic textiles markets, and 12 countries in Africa are among 31 globally that have now banned their import.

“The only way I survived was to start making Muslim women’s clothes,” said tailor Bema Sidibe from Ivory Coast, where around 20 tonnes of secondhand clothes flooded the country last year. In neighbouring Ghana, 10 times that amount arrive in an average year. “Muslim women don’t go for these western-influenced clothes and around traditional feast days you are guaranteed a few new outfits will be ordered,” Sidibe said.

The influx of cheap clothes has heaped pressure on an industry already struggling to adapt to changing fashions amid patchy infrastructure. During his presidency in Ghana, John Kufuor introduced national “Friday wear day” to encourage citizens to wear traditional clothes made using the jewel-coloured wax fabrics associated with African garments.

For many though, the trade allows clothes to be bought and sold cheaply and provides desperately needed jobs.

Increasingly, taste as well as necessity has come into play. Picking through Kemoh’s roadside cabin jammed between crumbling colonial buildings and corrugated-zinc shacks, bargain-hunter Fatima rifles through Gucci castoffs. “You can buy even cheaper Chinese ready-mades, but then you look like everybody else. Here I can find designer clothes no one else has,” she said, sporting a rainbow-coloured mohican haircut.

A roaring trade continues across Africa, from Ghana’s thriving “faux” markets to Nigeria’s “bend down” boutiques.

Each month, using shipping containers supposedly full of cars, a network of traffickers, including Chidi Ugwe, smuggles around 1.5 tonnes of clothes to Nigeria’s sprawling Katangua market, the largest flea market in the country.

“Most of the clothes land in smaller countries like Togo and Benin and then we get them to Nigeria. We call them flying goods, because they fly into the country without being seen,” Ugwe, a former customs officer, said, while thousands of shoppers thronged through the narrow market streets.

The clothes mostly come from Europe, although relatively affluent countries in Asia also provide a steady trickle. So popular are the clothes in Katangua market that thousands of small-time traders also bribe border officials to bring in their own bales.

“We call our shops ‘bend down’ boutiques because we have so many clothes we just pour them on the floor and you just bend down and select,” explained Mercy Azbuike, surrounded by piles of clothes overflowing from her wooden shack and piled into wheelbarrows outside.

“Even those selling clothes in boutiques [proper stores] are buying from us,” said Azbuike, who also travels to neighbouring Benin twice a month to replenish her stock.

“It’s the same boutique but you don’t have to bend down so it’s more expensive,” she said, emptying out a Disney rucksack stuffed with children’s pyjamas. Mothers with children elbowed past teenagers. “I cover myself but under my abaya [Muslim dress] I still want to wear nice, modern clothes,” said Fatoumata, 18, as she paid $13 for sequinned Levi’s jeans.

Not every seller is so successful. Emmanuel Odaibanga, who sells ski suits and jackets in a stifling shack, said business was slow. “It’s easy to buy jackets [from smugglers], hard to sell them,” he shrugged.

Allan Sekula: filming the forgotten resistance at sea

Category : Business

The photographer’s new film, about global maritime trade, has been hailed by Occupy activists. Its maker has spent a life challenging new forms of capitalism

Water has always played a large part in the photographer Allan Sekula’s life. As a student in San Diego at the end of the 1960s, he used to wander downtown and gaze up at the flophouse hotels through whose windows he could see money being exchanged between prostitutes and sailors. “It was Edward Hopper on military steroids,” he recalls. “That was the time of Vietnam, and there were even mutinies on some ships – especially among African-American sailors who were protesting against racism in the navy. Young guys my age from the west coast were being dehumanised and turned into a few good men.

“They’d come to the fence of the Marine Corps Recruiting Depot and say: ‘If I can get over this fence will you meet me at the laundromat down the street in an hour with a car?’ We managed to get some of them out. But often the shore patrol and navy police would come and pull them away. They’d be taken to brigs, assigned to a motivation platoon, and beaten up. The depot was next to an international airport on the waterfront, and some of the recruits were so desperate to escape they’d tried to get away by running across the runways, where they’d be hit by planes and be killed. This never appeared on the news.”

Sekula, who had grown up in the Los Angeles harbour town of San Pedro, was learning that the maritime world, far from being a realm of pleasure cruises and play, was riven by struggle and class conflict. Since then much of his extraordinary body of experimental work has been devoted to chronicling the social, economic and political dynamics of life on the oceans. His latest exercise in hydropoetics, a cine-essay entitled The Forgotten Space that he co-directed with Noël Burch, uses the statistic that 90% of cargoes today are carried by ship as its cue to develop a wide-ranging thesis about containerisation, globalisation and invisible labour.

Seas are fascinating, Sekula argues, because of the counter-orthodoxies and refutations they offer to modern political thought. “In Alain Tanner’s Les Hommes Du Port, a documentary about dockworkers in Genoa, he says: ‘The time of the sea runs counter to the lie.’ He doesn’t say what the lie is. But you know: it’s everything about neoliberalism. The sea is all about slow time – things move slowly, there’s a lot of waiting – and as such it contradicts all the mythologies of instantaneity perpetuated by electronic media.”

Sekula believes that seafaring work, like many other forms of manual labour, is ignored by many journalists whose own class status predisposes them towards fixating on white-collar and mental labour. But, as The Forgotten Space shows to haunting effect, this invisibility is also structural: containerisation has depeopled the bustling port cultures of previous eras and left in their wake automated landscapes.

Sekula, who was born in 1951 and whose grandfather migrated to the US from Poland, thinks that America has a particular amnesia regarding its relation to the sea. “We’ve always focused on the frontier hypothesis of US history. In spite of the takeover of the Panama Canal and the annexing of Hawaii, the sequential opening of western space has mainly been seen as a matter of terrestrial dominion. Today the function of the US navy is to protect the sea lanes of the world – that’s free trade. And it’s America’s technical and legal innovations that have made the globalisation of sea trade possible.”

This kind of systematic analysis, allied with deep, almost ethnographic research, is also present in Sekula’s influential book Fish Story (1995), which he describes as “a sort of experimental essay in words and pictures that sometimes reads like fiction, sometimes like an essay, sometimes journalism, sometimes prose-poetry”. Its photo-text form recalls earlier investigations of immiserated labour such as George Orwell’s The Road to Wigan Pier (1937) and James Agee and Walker Evans’s Let Us Now Praise Famous Men (1941), both of which Sekula admires.

I’m more sympathetic to traditions of critical realism than a lot of people in the art world,” he admits. “They treat journalism as a bad object and always think that when they intervene it’s without the naivety of the journalist. That doesn’t seem fair to what the best journalism and non-fiction has been.”

Sekula’s search for what the film historian Edward Dimendberg has called an “honest materiality” is informed by his own upbringing in San Pedro (a working-class town). His first major work, Aerospace Folktales (1973), featured interviews with his father, a chemical engineer at Lockheed, who had lost his job. “Being working class gives you a bitter sense that all the promissory notes of the American Dream are rarely cashed in. You see failure and blockages all around you.”

At San Diego, he took classes with the Frankfurt School philosopher Herbert Marcuse and conceptual artist John Baldessari, and studied alongside Martha Rosler, who would later come to prominence for her interest in questions of geopolitical infrastructures and social exclusion. He also read essays on photography by John Berger and Roland Barthes, and as a result began to theorise his future work. “I wanted to explore the discursive split between art and documentary, the myth of Alfred Stieglitz against the myth of Lewis Hine.” (Stieglitz was a revered figure in the development of art photography. Hine, by contrast, used his camera as a tool in the service of social reform.)

Sekula was sceptical of the romanticism and love of metaphors he discerned in the work of Stieglitz. “I saw the path of symbolism as one that led to hermeticism or a retreat from the social,” he recalls. “I was trying to defend a critical social realism.” His success at doing this, both in his often-cited study Photography against the Grain: Essays and Photoworks 1973–83 (1984) and recent films such as The Lottery of the Sea (2006), has won him many admirers. Among them is the American maritime historian Marcus Rediker, co-author with Peter Linebaugh of The Many-Headed Hydra (2000): “The old national stories just aren’t making much sense to people any more. Once you start thinking transnationally, you’re led to the sea: the ship is the first great instrument of globalisation. Allan’s idea that you can observe the compression of time and space in the modern world from the decks of a containerised cargo vessel is brilliant.”

It’s certainly an idea that has considerable potency in the present climate, when growing numbers of people all around the world are questioning the capitalist orthodoxies they’ve been fed by economists and politicians. In Barcelona last year, a gallery that screened The Forgotten Space was visited by many of the indignados who were protesting nearby. In Oakland, Occupy activists planned to show a pirated version of the film on a temporary screen they installed after blocking some of the streets in the port area.

This kind of resistance reminds Sekula that his collaborator Noël Burch had “hoped the film could ‘be completed by other means – and of necessity it would have to be completed by different means’. He meant by self-organised political means on the part of the people. The sea has often been thought of as recuperative; that more and more dockers and working people are insisting on not being moved on or not being swept away by the forces of efficiency and rationalisation gives me grounds for optimism.”

Why would policymakers want to gag a past master of economic prophecy?

Category : Business

Unctad was right about Mexico’s meltdown and the dangers of derivatives, yet rich countries apparently want to muzzle it

In February, the UN’s counterweight to the International Monetary Fund (IMF) and the World Bank fired off a withering critique of the global financial system, calling for fundamental reform as part of a new deal that can “lift all boats” in rich and poor countries alike.

The report from the UN Conference on Trade and Development (Unctad), entitled Development-led globalisation, had no qualms about taking potshots at the IMF and the World Bank. It said the first priority is “taming finance”, arguing that leaving markets to regulate themselves is both ineffectual and costly.

“Neither the IMF nor the World Bank, having abandoned their original raison d’être to the siren calls of unregulated financial markets, have been able to forge a vision of a post-crisis economy consistent with changed economic and political realities,” said the report, which set out the theme for this week’s Unctad XIII conference in Doha, Qatar, the first major UN ministerial conference on trade and development since the fallout from the economic crisis became clear.

But Unctad’s supporters fear the organisation will be muzzled if rich countries have their way. Last week, former Unctad staff accused rich countries of wanting to remove the organisation’s mandate to analyse global finance – effectively removing a dissenting voice in the debate on economic policy.

A statement released by former staff members, including Rubens Ricupero, a former Unctad secretary-general, says developed countries have been trying to limit the organisation’s remit to trade, governance and democracy, leaving analysis of global finance to the IMF and the World Bank.

“So the developed countries in Geneva have seized the occasion to stifle Unctad’s capacity to think outside the box,” said the letter. “This is neither a cost-saving measure nor an attempt to ‘eliminate duplication’ as some would claim. The budget for Unctad’s research work is peanuts and disparate views on economic policy are needed today more than ever as the world clamours for new economic thinking as a sustainable way out of the current crisis. No, it is rather – if you cannot kill the message, at least kill the messenger.”

The letter has been picked up by several development bloggers such as Duncan Green, head of research at Oxfam, who expressed his bafflement at the apparent attempt to limit debate. Tax Justice Network has also voiced its concern, while Robert Wade, professor of political economy and development at the London School of Economics, flagged up the issue on the Guardian’s economics blog.

According to John Burley – one of the signatories to the statement now doing the rounds in the blogosphere – the US, the EU, Switzerland and Japan are leading the charge to clip Unctad’s wings in the preparatory meetings before this week’s conference in Doha.

“Unctad would continue to produce its trade and development reports but it would not be allowed to analyse and develop critiques of the global financial system,” he said.

That would be a shame. When the Washington consensus held sway, Unctad railed against the perils of premature liberalisation of trade and capital flows. But like the fabled prophet Cassandra, it was ignored, its warnings dismissed as puerile and irrelevant. Now the organisation – an organ of the UN general assembly created in 1964 to promote international trade – can justifiably say: “We told you so.”

As Supachai Panitchpakdi, Unctad’s secretary-general, noted in the report, the organisation: warned in 1993 of an emerging financial crisis in Mexico; flagged the systemic risk from growing derivatives markets; and, in 1997, cautioned against rapid financial liberalisation in east Asia. Perhaps if policymakers had heeded Unctad’s warnings, we would not be where we are now.

The Department for International Development (DfID) gave an ambiguous response when asked about this kerfuffle.

“We are not seeking to narrow its mandate,” said a DfID official. “We want it to focus on what it does best, its work on trade and development, and to produce objective high quality research and formulate clear policy advice.”

David Miliband, Jeffrey Sachs and Ngaire Woods: watch the debate in full – video

Category : Business

Are we facing a crisis of democracy? Guardian columnist Jonathan Freedland chairs a debate at the Guardian Open Weekend between David Miliband, Jeffrey Sachs and Ngaire Woods

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Why do we continue to ignore China’s rise? Arrogance

Category : Business

Martin Jacques, author of a bestseller on China, asks why the west continues to approach the rise of the new global powerhouse with a closed mind. We obsess over details of the race for the White House, yet give scant regard to the battle to replace China’s current leadership. If we fail to pay heed to the political and economic shift of gravity, we will be sidelined by history

History is passing our country and our continent by. Once we were the centre of the world, the place from where power, ideas and the future emanated. If we drew a map of the world, Europe was at its centre. That was how it was for 200 years. No more. The world is tilting on its axis in even more dramatic style than when Europe was on the rise. We are witnessing the greatest changes the world has seen for more than two centuries. We are barely aware of the fact. And therein lies the problem.

I vividly recall when the first edition of my book When China Rules the World was published almost three years ago. At the many talks I gave, I showed a Goldman Sachs chart that projected that the Chinese economy would overtake the US economy in size in 2027. Invariably someone would point out this was only a projection, that the future was never an extrapolation of the past, that it was most unlikely the forecast would come to pass and certainly not in this time frame. No one suggested that the projection underestimated the date, even though the western financial crisis was already almost a year old.

The latest Economist projection suggests China will overtake America in 2018. So why are we – and Europe – so far behind the curve? Why do we insist on living in a world that was rather than is? Why are we so out of touch with both the speed and import of China’s rise?

Our ascendancy of the past two centuries – first Europe and then the US – has bred a western-centric mentality: the west is the fount of all wisdom. We think of ourselves as open-minded but our sense of superiority has closed our minds. We never entertained the idea that China could surpass the US. Backward, lacking democracy, bereft of Enlightenment principles, the product of a very different history, it was not western. So how could it? We were the universal model that everyone else had to embrace to succeed. The only form of modernisation that worked was westernisation. China would inevitably fail: the project was unsustainable. By insisting on seeing China through a western prism, we refused to understand China in its own terms. Our arrogance bred ignorance: we were not even curious.

China is, indeed, in so many ways, not like the west. It is not even primarily a nation state but a civilisation state. Whereas the west has primarily been shaped by its experience of nation, China has been moulded by its sense of civilisation. This helps to explain why the Chinese place such a huge emphasis on unity and stability, their reverence for the state and their embrace of ideas such as “one country, two systems” in Hong Kong. Similarly, unlike Europe, China never sought to acquire overseas colonies but established a tribute system in east Asia. The Chinese state bears a fundamentally different relationship to society compared with any western state. The state is seen as an intimate, as a member of the family, rather than, as in western discourse, a problem, a threat, or even the enemy. For the Chinese, the state is the embodiment of its civilisation: as such, it could not be more important, it lies at the heart of the Chinese pysche.

It is impossible to understand or make sense of China through a western prism. As China becomes a great power and, over the next two decades, steadily usurps America as the dominant global power, we will no longer have any alternative but to abandon our western parochialism and seek to understand China on its own terms. But the shift in mindset that faces us is colossal.

What does it mean to be a civilisation state? What was the tributary system and how will it shape China’s future behaviour? Why is China’s idea and experience of race so different from ours? Just as every non-western country was compelled during the 19th and 20th centuries to understand the west in its own terms, it is now our turn to make sense of a country so different from our own.

It will be a Herculean task: we always look west, hardly ever east. When Bo Xilai, a leading contender for one of China’s top positions, was dismissed more than a week ago, it received little attention in our media even though it was the most important event of its kind for more than two decades. Compare, if you will, the attention, devoted by the British media – notably the BBC and quality newspapers – to the Republican primaries with that given to China in the build-up to the Communist party congress in November, when President Hu Jintao and Premier Wen Jiabao will be replaced by Xi Jinping and Li Keqiang. The latter is of far greater consequence yet the coverage is paltry in comparison.

We have an enormous China deficit that urgently needs addressing. It is replicated throughout our culture; there has been much talk of promoting Mandarin in our schools and yet, in both the state and private sectors, pitifully few offer it as a serious option. Our economy exhibits the same morbid symptoms: Britain exports more to Ireland than it does to China, India, Russia and Brazil combined. Unless we address these questions, we face the prospect of being sidelined by history.

China’s remarkable economic growth started in 1978, but as its economy was then only a 20th the size of America’s, its global impact was minuscule. By the turn of the century, however, after more than two decades of double-digit growth, the Chinese economy was more like a quarter of the size of America’s, with the consequence that its global effect was of an entirely different order. The story, moreover, was no longer simply about China because by then its rise had begun to transform the world. Only with the financial crisis in 2008, however, did the west finally begin to wake up to the implications.

Although countless commentators speak lazily of the global financial crisis, this is a misnomer. A visit to Beijing will soon dispel the illusion. The place is brimming with energy, elan, confidence and brio. While the west is mired in austerity and stagnation, with a psychology to match, China is riding an extraordinary wave of optimism. In 2010, according to a Pew poll, 91% of Chinese felt good about their country’s economy compared with 24% in the US and 20% in Britain. While most western economies are still smaller than they were before 2008, the Chinese economy has been growing in the region of 9-10% a year. That is why it will overtake the US almost a decade earlier than previously predicted.

2008 ushered in a new era, the beginning of a Chinese world economic order. Until recently the US largely shaped globalisation but now China is increasingly assuming that role. Its most dramatic expression is trade. China will shortly become the world’s largest trading nation. It imports huge amounts of natural resources and exports a massive volume of manufactured goods: in 2011, it overtook the US to become the world’s largest producer of manufactured goods, a position America had previously held for 110 years. In 1990, there was hardly a country in the world for which China was its chief trading partner. By 2000, there were a few, but nearly all were in east Asia. By 2010 the list stretched around the world, including Japan, South Africa, Australia, Chile, Brazil, India, Pakistan, the US and Egypt. Imagine how long the list will be in 2020.

China is rapidly emerging as a great financial power. In 2009 and 2010 the China Development Bank and the China Exim Bank – which I would guess the great majority of Observer readers have never even heard of – lent more to the developing world than the World Bank. Just as the Rothschilds funded much of Europe’s industrialisation in the 19th century, so these two banks are now doing the same on a far larger canvas, namely the entire developing world, comprising 85% of the world’s population. Meanwhile, in late 2008, China began making the renminbi, hitherto a currency that circulated only in China, available for the settlement of trade. The HSBC has predicted that by 2013-15 half of China’s trade with the developing world (which constitutes more than half of China’s total trade) will be paid for in renminbi. It is the first stage in the process by which the renminbi will replace the dollar as the world’s dominant currency.

The centre of gravity of the global economy is remorselessly shifting from the developed to the developing world. China is the main player and the outcome will be the rapidly declining influence of the developed world and the reconstitution of all major global institutions, notably the International Monetary Fund and the World Bank, to reflect this.

Pause for a moment and think what it feels like to be in Beijing these days. The place is on fire. It is alive with argument and debate. A country growing at 10% a year is constantly throwing up huge and novel problems that require response and solution. It is a far cry from Britain mired in stagnation, where debate rarely ever breaks new ground and for the most part is backdated. In contrast, China is not only remaking itself with extraordinary speed, but is also remaking the world. Beijing resembles London in 1850 or Washington in 1950, but on an epic scale. It is the most interesting and stimulating city in the world.

I spent much of last autumn as a visiting professor at Tsinghua University in Beijing. My stay was a whirl of talks and discussions. Far from the western image of China being devoid of debate, Beijing is positively throbbing with it. And it is extraordinarily open-minded and open-ended. I was invited to give a lecture at the ministry of foreign affairs to around 100 young diplomats at which I suggested that a foreign policy based on Deng Xiaoping’s principles was no longer appropriate: a new approach was required that reflected Chinese growing global interests while also drawing on its history. Far from being taken aback, those present entered into a vigorous discussion. These debates, furthermore, are infused with huge significance. As China becomes a great global power they will shape its future policies and priorities – and thereby the world.

One might think that in such times, and with such glittering prospects, China would be full of hubris, bordering even on arrogance. On the contrary, the opposite is the case. The Chinese are still deeply preoccupied with the colossal problems that confront a still poor and developing country of 1.3 billion people. Inequality has soared, sowing the seeds of growing resentment against the rich; land seizures, as events in Wukan recently demonstrated, provide a continuing threat to social stability; massive corruption is corroding the sense of justice and fairness. While possessed of the kind of inner confidence and experience that comes from being the heirs of a great civilisation, the Chinese have no illusions about where they have got to and the tasks that lie ahead.

In November, the Communist party will hold its 18th congress. It will elect a new leadership for the next 10 years during which time China will undergo profound change. Already, there is a major shift under way in economic priorities from low value-added production and massive exports towards higher-end production and domestic consumption. During the next decade we can expect important political reforms.

In Britain, meanwhile, China will continue to receive scant coverage. But, kicking and screaming, forever looking backwards to the age of the west, we will, nevertheless, be dragged into the age of China. Time waits for no country. Over the next decade, we will increasingly come under China’s spell.

It is worth reminding ourselves that last October, when the future of the euro was in grave doubt, European leaders pleaded with China to extend a huge loan. Britain is also broke and needs Chinese money for its infrastructure projects. There will be a growing clamour to learn Mandarin. And, as yet hardly recognised, we will find ourselves coming under the growing influence of Chinese soft power, be it the influence of Chinese parenting or the country’s stellar educational performance. China will irresistibly shape our future.