China, which last quarter became the world's second largest economy, is on a trajectory to pass the United States in 15 or 20 years. While some see this rise as a threat (competition) or opportunity (new markets) for American business, a thought-provoking blog by Chris Meyer and Julia Kirby makes an argument for another effect: the redefinition of capitalism.
A new form of capitalism will evolve, they argue in their post Why China Will Change Capitalism. This time it will be an economic system dominated by the East, not the West.
"China's increasing dominance will rewrite the rules of capitalism for everyone. Note that the prevailing form of capitalism at any time is simply the form being practiced by the most capitalists. As the center of gravity of global trade shifts toward China, the western style capitalism, with its heavy emphasis on free markets and private ownership, will no longer hold sway."What will this new capitalism look like? Unfortunately, the authors don't offer much insight. But I suspect no one country will dominate the shape of commerce in the 21st century as much as America did in the 20th, even China. Of course China will be a dominant player, but India, Brazil, Africa, Russia and the Arab states will all have important roles to play. The U.S., we think, will be continue to be a powerful economic engine powering much of the global economy.
Capitalism in all those countries is shaped by local laws, history, custom, culture, values, and consumer preferences. Companies that wish to compete in those markets will have to adapt.
Harvard Business School professor William Kirby opines that China is simply returning to its historic role as economic giant. What do you think of this idea as China as economic agenda-setter over the next century?