"Prediction is very difficult, especially about the future." – Misattributed to Niels Bohr

This week you will find a very interesting collection of articles in The Economist about China's future. The fast economic rise of the country has created a lot of fears around the world, being sometimes perceived as a selfish, revolutionary and opportunistic power. Given the size of the country, its ambitions, its incredible economic performance, its unstable domestic situation and its supposedly unified political system, China does indeed project an awkward image to the world. Its neighbours are fearful of its growing power and assertiveness while the countries further away are trying to cope with its international rise.

Indeed, from the Americas to Europe and Africa to Oceania, the whole world has somehow changed with the rise of China. At first welcomed as a potential leader of the Third World against the Western domination, China has disappointed many while reinforcing preconceived fears in the Old World. Today, the Middle Kingdom has too few friends and sits awkwardly in an international system created and controlled by Western nations. Internally and externally, its fast economic growth over the last 30 years has left many embittered and envious.

While its size and growing power let the rest of the world press for more involvement internationally, China's numerous internal weaknesses (lack of resources, administration issues, dividing inequalities, and unsustainable economic model to name a few) are only making it reluctant to deploy precious resources abroad, reinforcing the perception that it is a selfish country.

If anything, the new 'Chinese Dream' promoted by the ruling party as an inspirational slogan for unity and country revival is quite different from the American Dream: far from universal values and ideals that can be projected throughout the world, it addresses mainland Chinese people. There's nothing intrinsically bad about it, but again, given the size of the country and its domestic challenges, it offers the image of an egocentric country.

The underlying issue may be one of finite resources: the Western world could sustain its living standards as long as the rest of the world (90% of the world population) remained poor. The rise of China and the rest of Asia is rapidly increase the pressure on existing resources, but they are only bringing home the fact that the Western economic model is unsustainable. Yet instead of changing course, the world is extracting resources way above the repletion pace, meaning that we are consuming tomorrow's share of resources.

The current economic model (capitalism) is unable to correctly account for the actual assessment of damages done by our extraction of finite resources, which in turn limits our ability to correctly manage their reserves. Increased exploitation to prop up insatiable and unsustainable living standard is leading to a rise in global warming which in turn reduces repletion rates and tomorrow's resources. Taken together, these facts project a bleak future in a matter of decades.

Another very good article this week is about forecasts. Acutely aware about the numerous fallacy of forecasting through Nassim Nicholas Taleb's work, we are still confident that the risks of an environmental catastrophe are rising faster, while the ability of nations to sustain their current way of life is decreasing rapidly. Over the last decades, no major invention has been able to reduce our consumption of resources, while no major source of resources have been found. New Information Technologies are great, but they boosted consumption rates instead of decreasing them.

We've been able to increase the utilization efficiency of resources, but the real consumption has been steadily increasing over the years. We do more with less, but we're still using more than ever before. Around the world, governments are aware of this fact. While it isn't their main priority, they are still trying to avoid the worst for their home country. China, with its enormous population, is only one of them, arguably the biggest (India anyone?).

What comes next is uncertain, but the plausible scenario is that at current consumption rates, our planet will experience a rise in temperature that will lead to a great extinction event, and this time we will be the dinosaurs: too big, too greedy, incapable of foresight and out for a fight for the last resources. Yet, the dinosaurs were unable of self reflection and could understand the plague that would wipe them out. Humans, on the other hand, have been warned for more than 40 years about the cataclysm of their own making. We can definitely try harder.

Science, General Knowledge & Environment

Limits to Growth was right. New research shows we're nearing collapse – "But our findings should sound an alarm bell. It seems unlikely that the quest for ever-increasing growth can continue unchecked to 2100 without causing serious negative effects – and those effects might come sooner than we think."

In shadow of oil boom, North Dakota farmers fight contamination – "Yet, state records, testimonies from oil-field workers and the Facebook page Bakken Oilfield Fail of the Day, which publishes daily photos of tank explosions, truck collisions and machine malfunctions, suggest that wastewater spills are still a significant hazard in the current boom."

Offer highlights tuna plight – ""China has not been, and will not, under any sanction system which may be adopted in the future, be subject to any penalties for such historical non-compliance," the documents say. Regional fishing organisations (RFMOs) had no mechanisms available to "impose any sanction against China", they say, noting bigeye limits are set against governments, not companies."

How to see into the future – (Hat tip CO) – "So what is the secret of looking into the future? Initial results from the Good Judgment Project suggest the following approaches. First, some basic training in probabilistic reasoning helps to produce better forecasts. Second, teams of good forecasters produce better results than good forecasters working alone. Third, actively open-minded people prosper as forecasters."

History & Geopolitics

A War Is Long Over, but Many Still Seek to Learn Its Lessons – (Hat tip CO) – "We had the certainty of the Cold War, which had its particular clarity. But we’re now living in a much more complicated world, with low-level conflicts that never seem to conclude, and the sense of things ending somehow, of a great period of transition."

Conversation: Analyzing the Implications of Scottish Independence – [Video] – "Stratfor's Managing Editor Ben Sheen and Europe and Economic Analyst Mark Fleming-Williams discuss the ramifications of Scottish independence in the United Kingdom and beyond."

The Virtue of Subtlety: A U.S. Strategy Against the Islamic State – "But the principle of balance of power does not mean that balance must be maintained directly. Turkey, Iran and Saudi Arabia have far more at stake in this than the United States. So long as they believe that the United States will attempt to control the situation, it is perfectly rational for them to back off and watch, or act in the margins, or even hinder the Americans."

Conversation: Analyzing the Confluence of Technology, Media and Terror – [Video] – "Stratfor's Editor-in-Chief David Judson and Chief Geopolitical Analyst Robert D. Kaplan discuss Kaplan's latest column on the James Foley execution and the concept of "terrorism as theater"."

Conversation: Analyzing The Islamic State's Limited Reach – [Video] – "Stratfor's Fred Burton and Scott Stewart discuss the limited threat posed to the United States by the Islamic State."

As Caliphates Compete, Radical Islam Will Eventually Weaken – "First, the attempt to create caliphates and the associated difficulties of governance will force many radical Islamists to opt for pragmatism and become relatively moderate. Second, opposition from fellow Muslims also learning about politics and governance will give them less room to operate."

China's Future – (Hat tip CO) – Must read "If China could resolve its identity crisis and once again become an attractive civilisation rather than just an enviable development model, it would be much better placed to get the respect and influence it craves."

China’s Borderline Belligerence – "Under pressure from an unyielding and revanchist China, India urgently needs to craft a prudent and carefully calibrated counter-strategy. For starters, India could rescind its recognition of Chinese sovereignty over Tibet, while applying economic pressure through trade, as China has done to Japan and the Philippines when they have challenged its territorial claims."

Finance & Economics

France and Friends: Merkel Increasingly Isolated on Austerity – "The result is that Hollande has managed to disappoint everybody: the one group with his announced intentions and the other with his failure to act. And everybody has been unimpressed with the poor figure he has cut in the process. Now he is left with little else than the demand that formed a key element in his campaign. It was time, he said on the stump, to "reorient Europe" and demanded an end to austerity."

Looking Beyond China, Some Companies Shift Personnel – (Hat tip CO) – "More important, many multinationals are starting to pay renewed attention to Southeast Asia, which is showing signs of revival 17 years after the Asian financial crisis. They have found it hard to do that from Shanghai or Beijing."

Picture of the day: Sleepers

JPNSleepyBenchWritten by Carlito, with help from Ludo & Maverick

About Carlito Riego

"Great perfection may appear imperfect, but its usefulness is inexhaustible. Great abundance may appear empty, but its usefulness cannot be exhausted. Great correctness may appear twisted, great skills appear crude, great eloquence appear awkward. Activity conquers cold; inactivity conquers heat. Clear serenity governs the world." - Lao Zi