Eran Peleg, CIO October 24, 2017
Prior to World War I (WWI), the world’s largest, richest and most dominant imperial power was Great Britain. The British Empire famously occupied one quarter of the globe. British colonial possessions in the late 1800s included Canada, India, Ceylon (Sri Lanka), Burma, Australia, New Zealand, Hong Kong, several Pacific and Caribbean Islands, South Africa, Rhodesia, Egypt and other parts of Africa. After the Great War, the world began to change and the Empire started to lose ground (ultimately, it lost its Superpower status at the end of World War II).
World War I ended on 11th November 1918 – almost exactly 100 years ago. While Great Britain was on its way down, the United States of America was already on the rise. After World War II, during the 'Cold War' period, it was the USA and the Soviet Union that were considered to be the two global superpowers. Since the dissolution of the Soviet Union in 1991, only the USA remained as a true global superpower.
100 years after the end of WWI, we may be in the midst of another major shift in the global balance of power. In recent years, America's global position has been weakening. Trump's presidency is only accelerating this process. US global influence is waning -- creating a power vacuum.
China is happy to enter into this vacuum. It has always had aspirations to become a global superpower. In nominal GDP terms, its economy is already the second largest in the world, after the US. If you adjust for differences in the cost of living between countries (Purchasing Power Parity basis), China actually comes out first, ahead of the United States. According to The Economist magazine, the process of shifting global power may have already been concluded: In its 14th October edition, it named Xi Jinping, China's leader, as 'The World's Most Powerful Man'. These changes will force political analysts, economists and financial market participants to reconsider their assumptions and thinking about global politics and the global economy.