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Historian Niall Ferguson has written several insightful articles over the past few years helping me to understand the ongoing shift from the West to the East going on in the world.  A new order to our world is emerging and, in this Perspective, I seek to make sense of it.

• First of all, Ferguson argues that over the last 500 years the West has had six ?killer applications? that explain its dominance of the world in every sense?militarily, financially, socially and in setting the world?s agenda.

1. Competition:  Europe was politically fragmented and within each monarchy or republic there were multiple competing corporate entities.  There was no tight, centrally controlling and dominating all aspects of European life, especially its economic dimension.
2. The Scientific Revolution of the 17^th century:  All the major breakthroughs in mathematics, astronomy, physics, chemistry and biology occurred in Western Europe.
3. The rule of law and representative government:  This optimal system of social and political order emerged in the English-speaking world, based on property rights and the representation of property owners in elected legislatures.
4. Modern medicine:  All the major 19^th– and 20^th-century advances in health care, including the control of tropical diseases, were made by Western Europeans and North Americans.
5. The consumer society:  The Industrial Revolution took place where there was both a supply of productivity-enhancing technologies and a demand for more, better and cheaper goods, beginning with cotton garments.
6. The work ethic:  Westerners were the first people in the world to combine more extensive and intensive labor with higher savings rates, permitting sustained capital accumulation.  For decades, historians have debated the role that biblical Christianity played in the formation and the sustainment of this work ethic.

Ferguson argues that these six elements were the key to Western ascendancy!  But, beginning in the 1950s, Japan and other East Asian nations began adapting these six elements to their industrial model and, in effect, began mimicking the West.  Singapore, Taiwan, South Korea and now China are following Japan.  The per capita GDP of all these Asian nations is rising, with Singapore exceeding the US, with its per capita GDP 21% higher than that of the US.

• Second, Ferguson summarizes China?s new strategy in four pithy phrases?consume more, import more, invest abroad more and innovate more.  Let?s examine each one of these.

1. China recently overtook the US as the world?s largest automobile market (14 million sales a year, compared to 11 million for the US).  Its demand is expected to rise tenfold in the years ahead.
2. By 2035, according to the International Energy Agency, China will be using a fifth of all global energy, a 75% increase since 2008.  It accounted for 46% of global coal consumption in 2009, the World Coal Institute estimates, and consumes a similar share of the world?s aluminum, copper, nickel and zinc production.  Last year China used twice as much crude steel as the European Union, the US and Japan combined.  China accounts for over one-fifth of global growth and has become the most dynamic new market for other people?s goods.
3. In January 2010 alone, China made direct investments abroad worth a total of $2.4 billion in 420 overseas enterprises in 75 countries.  The overwhelming majority of these investments were in Asia and Africa, with the largest sectors being in mining, transportation and petrochemicals.
4. China aims to become the world?s leading manufacturer of wind turbines and photovoltaic panels.  In 2007 China overtook Germany in terms of new patent applications.  Further, in 2008, for the first time, the number of patent applications from China, India, Japan and South Korea exceeded those from the West.

Niall Ferguson concludes his perceptive essay by arguing that ?what we are living through now is the end of 500 years of Western predominance.  This time the Eastern challenger is for real, both economically and geographically.  The gentlemen in Beijing may not be the masters just yet.  But one thing is certain:  They are no longer the apprentice.?

See Niall Ferguson in the Wall Street Journal (20-21 November 2010).