Chimerica

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.

Origin

First coined by historian Niall Ferguson 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.

See also

Chindia

Sino-American relations

Group of Two

Global saving glut

Bretton Woods II

References

Category:2008 in economics Category:Financial crisis of 2007–2010 Category:2000s economic history Category:Economy of the People's Republic of China Category:Economy of the United States Category:China – United States relations