Chimerica
Encyclopedia
Chimerica is a neologism coined by Niall Ferguson
and Moritz Schularick describing the symbiotic relationship between China
and the United States
, with incidental reference to the legendary chimera
.
In March 2010, anticipating the risk of tensions between the two nations escalating into a currency war
, Ferguson published a paper forecasting that Chimerica would soon unravel.
and economist Moritz Schularick in late 2006, they argue that saving by the Chinese and overspending by Americans led to an incredible period of wealth creation that contributed to the global financial crisis of 2008–2009. For years, China accumulated large currency reserves and channeled them into U.S. government securities, which kept nominal and real long-term interest rates artificially low in the United States. Ferguson describes Chimerica as one economy which "accounts for around 13 percent of the world’s land surface, a quarter of its population
, about a third of its gross domestic product
, and somewhere over half of the global economic growth
of the past six years." He suggests Chimerica could end if China were to decouple from the United States bringing with it a shift in global power and allowing China "to explore other spheres of global influence, from the Shanghai Cooperation Organization
, of which Russia
is also a member, to its own informal nascent empire in commodity-rich Africa."
The accumulation of American debt which has been estimated at over $800 billion suggests the two nations are intrinsically linked; the economic symbiosis prevalent between the two suggests the separation would harm both countries and be disastrous for the global economy.
The idea of Chimerica features prominently in Ferguson's 2008 book and adapted television documentary The Ascent of Money
which reviews the history of money, credit, and banking.
Niall Ferguson
Niall Campbell Douglas Ferguson is a British historian. His specialty is financial and economic history, particularly hyperinflation and the bond markets, as well as the history of colonialism.....
and Moritz Schularick describing the symbiotic relationship between China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
and the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, with incidental reference to the legendary chimera
Chimera (mythology)
The Chimera or Chimaera was, according to Greek mythology, a monstrous fire-breathing female creature of Lycia in Asia Minor, composed of the parts of multiple animals: upon the body of a lioness with a tail that ended in a snake's head, the head of a goat arose on her back at the center of her...
.
In March 2010, anticipating the risk of tensions between the two nations escalating into a currency war
Currency war
Currency war, also known as competitive devaluation, is a condition in international affairs where countries compete against each other to achieve a relatively low exchange rate for their own currency. As the price to buy a particular currency falls, so to does the real price of exports from the...
, Ferguson published a paper forecasting that Chimerica would soon unravel.
Origin
First coined by historian Niall FergusonNiall Ferguson
Niall Campbell Douglas Ferguson is a British historian. His specialty is financial and economic history, particularly hyperinflation and the bond markets, as well as the history of colonialism.....
and economist Moritz Schularick in late 2006, they argue that saving by the Chinese and overspending by Americans led to an incredible period of wealth creation that contributed to the global financial crisis of 2008–2009. For years, China accumulated large currency reserves and channeled them into U.S. government securities, which kept nominal and real long-term interest rates artificially low in the United States. Ferguson describes Chimerica as one economy which "accounts for around 13 percent of the world’s land surface, a quarter of its population
Population
A population is all the organisms that both belong to the same group or species and live in the same geographical area. The area that is used to define a sexual population is such that inter-breeding is possible between any pair within the area and more probable than cross-breeding with individuals...
, about a third of its gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
, and somewhere over half of the global economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
of the past six years." He suggests Chimerica could end if China were to decouple from the United States bringing with it a shift in global power and allowing China "to explore other spheres of global influence, from the Shanghai Cooperation Organization
Shanghai Cooperation Organization
The Shanghai Cooperation Organisation or SCO , is an intergovernmental mutual-security organisation which was founded in 2001 in Shanghai by the leaders of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan...
, of which Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
is also a member, to its own informal nascent empire in commodity-rich Africa."
The accumulation of American debt which has been estimated at over $800 billion suggests the two nations are intrinsically linked; the economic symbiosis prevalent between the two suggests the separation would harm both countries and be disastrous for the global economy.
The idea of Chimerica features prominently in Ferguson's 2008 book and adapted television documentary The Ascent of Money
The Ascent of Money
The Ascent of Money: A Financial History of the World is Harvard professor Niall Ferguson's tenth book, published in 2008, and an adapted television documentary for Channel 4 and PBS...
which reviews the history of money, credit, and banking.
See also
- ChindiaChindiaFor the landmark in Târgovişte, see Chindia Tower. For a person of mixed Chinese and Indian origin, see Chindian.Chindia is a portmanteau word that refers to China and India together in general. The credit of coining the now popular term goes to Indian Member of Parliament Jairam Ramesh...
- Sino-American relationsSino-American relationsFor the article on U.S.-Taiwan relations, see Republic of China – United States relations.Sino-American or People's Republic of China–United States relations refers to international relations between the United States of America and the government of People's Republic of China...
- Group of TwoGroup of TwoThe Group of Two is a proposed informal special relationship between the United States and the People's Republic of China. Originally initiated by C...
- Global saving glutGlobal saving glutGlobal saving glut is a term coined by Ben Bernanke in 2005. The term describes a situation in which there are worldwide too many savings with respect to investment opportunities. On a national level a saving glut creates the tendency for savings to finance current account deficits instead of...
- Bretton Woods IIBretton Woods IIThe 2008 G-20 Washington Summit on Financial Markets and the World Economy took place on November 14–15, 2008, in Washington, D.C., United States. It achieved general agreement amongst the G-20 on how to cooperate in key areas so as to strengthen economic growth, deal with the financial...