Daily Archives: December 22, 2011

This may well be the year when world leaders fall asleep just as the world cries out for more leadership. They will remain active and engaged with domestic concerns – especially the challenges of surviving in office – but ignore the many global challenges that demand their urgent attention.

Barack Obama will focus on only one issue in 2012: winning re-election. He will not try to restart the Doha round of trade talks, or to press for more action on climate change. Americans are not clamouring for action in these areas. More dangerously, as Americans become more economically despondent, China will naturally emerge as scapegoat number one. It would be politically suicidal for Mr Obama to tell Americans the hard truth: that they can no longer assume they will remain competitive as a God-given right.

Sadly, China’s leaders will also remain focused on their own leadership transition. It is now more or less known that Xi Jinping and Li Keqiang will succeed Hu Jintao and Wen Jiabao. That is the easy part. The hard part is deciding who will be No. 3, 4, 5, and so on. Too much is at stake here for global challenges to take priority.

The European Union too will need at least another year or two to sort out the eurozone mess, and its leaders, who seem to lurch from one crisis summit to the next, will have no capacity left to focus on global challenges.

Nonetheless, the rapid pace of change unleashed by technology and the desire of billions to join the march to modernity mean that we have to adjust faster and faster to all the challenges of living in a small, complex, interdependent world. Hence the demand for global leadership will grow apace in 2012. And no global leader will emerge. It does not take a genius to predict that this is a prescription for continued turbulence and uncertainty.
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China’s growth has become crucial to the world economy – and the biggest issue in 2012 will be whether it can engineer a soft landing.

Growth, under downward pressure from weakening exports and a fall in government-sponsored investment, will have to be led by stronger personal consumption if the economy is to grow by more than 8 per cent. To achieve this, China will have to subdue inflation so that rising wages translate into higher personal income.

Let’s hope, for all our sakes, that they can pull it off.  Continue reading »