Niall Ferguson: China is Fast Becoming America's Master

It took 500 years, but China and other Asian powers are passing the West again as masters of the global economy. According to Harvard Business School professor Niall Ferguson, a recent trip to China left him with the impression that, even if not true just yet, it is inevitable and close at hand.

China's leaders are certainly feeling their oats. In recent months they've rebuffed President Barack Obama's push for the country to rethink its currency manipulation and to cap imbalances in global current accounts. And when Federal Reserve Chairman Ben Bernanke announced plans for "quantitative easing," China snapped back with terms such as "irresponsible" and "uncontrolled."

Meanwhile, The indebtedness of Western economies continues to increase, China is about to overtake the US in share of global manufacturing, and Asia is out-innovating the West, if you go by number of patents issued.

Recalling these events, Ferguson thinks of the words, "We are the masters now." He writes in the Wall Street Journal, "I wonder if President Barack Obama saw those words in the thought bubble over the head of his Chinese counterpart, Hu Jintao, at the G20 summit in Seoul last week."

The West became ascendant by riding six "killers apps," according to Ferguson: competition, the Scientific Revolution, the rule of law and representative government, modern medicine, the consumer society, and work ethic. China has clawed back by focusing on science, medicine, the consumer society, and work ethic. Competition and representative government, not so much.

"What we are living through now," Ferguson concludes, "is the end of 500 years of Western predominance. This time the Eastern challenger is for real, both economically and geopolitically. The gentlemen in Beijing may not be the masters just yet. But one thing is certain: They are no longer the apprentices."

If that wasn't foreboding enough (at least from a Western perspective), here comes The Economist with a piece on China's state-owned firms binging on a buying spree of companies around the world, snapping up firms including Sweden's Volvo. (The magazine sees this trend largely as a positive for the world economy.)

Look, the era of one country or region dominating the world economy is over. Harvard Business School's new Dean, Nitin Nohria, calls this the "global century," replacing what was clearly the American century. This state of affairs doesn't mean, necessarily, that the US is in decline; rather that competition is increasing from across the globe.

What do you think? Is the sun setting on the West? What can the US do to recover?