My Take

Bite of Big Apple a reminder of history

PUBLISHED : Friday, 28 June, 2013, 12:00am
UPDATED : Friday, 28 June, 2013, 4:39am

History does not repeat itself exactly. But you often see recurrent patterns that are alarming.

Real estate circles in New York are abuzz with news that mainland tycoon Zhang Xin is partnering with the Brazilian Safra family to buy a large stake in the iconic General Motors Building. Haven't we been here before?

I was a college student in the US in October 1989 when the Japanese bought the Rockefeller Centre and the legendary Radio City Music Hall from their owner, the Rockefeller Group. Americans were fretting their best days were gone and that the Japanese were taking over. So when the deep-pocketed Mitsubishi Estate Company of Tokyo, then one of the world's largest real estate developers, took over the Rockefeller Centre, many Americans thought it was the signal that the game was up.

But then, the Nikkei stock index and the property market entered a death spiral that would herald Japan's two-decade-long deflationary hell. In retrospect, 1989 marked the end of the Japanese miracle. The fall of the Berlin Wall that year would launch America as No1 again, not only in terms of economics and the military, but in the realm of ideology or ideas. Marxism died. Anglo-American democracy and free-market capitalism, Thomas Friedman of The New York Times famously lectured the world, were now "the only game in town". The era would mark the end of history, according to Francis Fukuyama. Well, history returned with a vengeance on September 11, 2001, but the US indisputably had a very good decade before that.

Now, the Chinese and Brazilians want to buy the GM building together at a time when protesters are marching in dozens of cities in Brazil against inequality, corruption and their government, despite the country's economic miracle.

China just had a credit scare likened by some to a Lehman moment as its economic juggernaut slows after three decades of double-digit growth. The central government is struggling to contain economic dangers from a property market bubble to an out-of-control shadow banking sector. Many Chinese pundits mistakenly thought the global financial crisis would mark the irreversible decline of American hegemony. The US is recovering better than everyone else, though slowly. It's China that is flashing all the danger signs. If there is a history lesson, it is that every great power should have humility.