The Financial Shift East
Wall Street is the financial capital of the world. It has been that for many decades. Since the United States became a super-power, surpassing Great Britain size of economy and advancement of the banking system, New York is the epicenter for financial activity.
This is something that many presume will be the case going forward. There is a train of thought, and it is valid, that there is a shift about to occur. Whether it is because of a 50 years cycle or simply the way the world is shaping up, many feel the financial might over the next decade plus will end up in the East.
Of course, this basis of this is the rise of China. With the country cementing itself as a major global player, it is hard to argue the might it wields. The economy is the second largest in the world and many project it will surpass the United States by the end of this decade.
It is one of the few countries that maintained a significant growth rate. While the West was mired in a 2%-3% trudge, the Chinese economy was advancing at a double digit rate for decades. This allowed it to surpass powerhouses like Germany and Japan.
With a demographic issue that is still a couple decades out, this means that China could be in position to remove the West as the financial hub of the world.
This makes a lot of sense since there is a ton of investment still going on in that country. Money is pouring in from all over the world as investors take advantage of the massive growth numbers still taking place.
The country is pushing ahead with automation which should help to offset the wage inflation it saw over the past two decades. Many contracts were lost as global companies shifted production to low cost areas such as Vietnam and Laos. This is something the Chinese are looking to reverse.
https://nypost.com/wp-content/uploads/sites/2/2021/05/beijing.jpg?quality=90&strip=all&w=618&h=410&crop=1
Things always seem to start at the top. When talking financial centers, it is best to focus, not upon governments but rather, billionaires.
Last year was a tremendous year for billionaires. We saw the net worth of those in this class absolutely explode. The dual benefit of a rising stock market along with a hot housing sector put their net worth in overdrive.
That said, there was one shift that is important to note in this discussion. For the first time, the number of billionaires in New York City was surpassed by Beijing.
The Chinese capital has exactly one more billionaire than Gotham, 100 to 99, according to Forbes’ recently released list.
This happened in spite of the fact that the number of billionaires increased by 32 in total.
New York City is a place many feel is in trouble. It is no secret that the wealthy are being targeted by a political climate that feels entitled to take more of what they have. Whether one agrees with this or not, the bottom line is the wealthy have the ability to pick up and leave.
A hedge fund manager or wealthy business person can run things just as easily from Florida as he or she can from a plush (and expensive) New York City office. After all, these people can afford the Lear jets to fly them back and forth for meetings.
This can, of course, have enormous geo-political implications. It is obvious why the United States is doing all it can to help Hong Kong maintain some independence from China. If the U.S. can somehow split up that union, it would help its cause.
This is very unlikely however. Therefore, with all that is taking place, and the West's intent on sabotaging itself with lockdowns, the economic power in a decade will be in the East. We live in a time where financial capital is the engine behind economic progress. Even in cryptocurrency, we see how strong the East is in this arena. Between China and South Korea, there is a strong foundation being formed. This is something that those in the traditional financial realm discuss quite frequently. Even they see the need to try to combat this.
Some believe that is also a 500 year cycle where the power center moves from east to west and back again. This is something one could buy into although that is a long time to surmise a trend. Either way, we see that a shift appears to be happening. If it goes through is yet to be determined.
It does look like we are on track for it though. Do not be surprised if the financial center in a decade or so is in the East, not the West.
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