Yesterday on the op-ed pages of the Wall Street Journal (sub req), Harvard Business School professor Niall Ferguson, author of bestselling books like Colossus and Empire, coined a new word to describe the economic relationship between America and China: Chimerica. (The word has the added bonus of sounding a lot like “Chimera,” to invoke the Chinese dragon, presumably). Is it just me, or does Chimerica sound like a description of the relationship between East Germany and West Germany during the heyday of the Soviet Union?:
“To understand the current and persistent disconnect between returns on and the cost of capital, think of a single Sino-American economy. Chimerica accounts for only 13% of the world’s land surface, but a quarter of its population and fully a third of its GDP. What’s more, it’s accounted for over 60% of the cumulative growth in world GDP over the past five years.
West Chimericans are wealthy and hedonistic; East Chimericans are much poorer… But the two halves of Chimerica are complementary. West Chimericans are experts in business administration, marketing and finance. East Chimericans specialize in engineering and manufacturing. Profligate West Chimericans cannot get enough of the gadgets mass produced in the East; they save not a penny of their income and are happy to borrow against their fancy houses. Parsimonious East Chimericans live more humbly and cautiously. They would rather save a third of their own income and lend it to the West Chimericans to fund their gadget habit – and keep East Chimericans in jobs.”
[image: Berlin Wall Dragon]