Goldman’s Jim O’Neill: “Our Future Prosperity Depends on China”

It should come as no surprise that Jim O'Neill, the Goldman Sachs executive who coined the "BRIC" concept a decade ago, still defends these countries (Brazil, Russia, India and China) as the world's growth engine. In his latest book "The Growth Map" he delves into the story behind the BRIC phenomenon, analyzes their rise from developing countries to economic powerhouses, and shares his latest acronym "MIST" (Mexico, Indonesia, South Korea and Turkey) with readers, just four countries in his "Next Eleven" theory.

O'Neill is convinced these "growth markets" (please don't call them "emerging" anymore) will outperform in the near future and takeover the economic reins of both Europe and the United States. During this transition, investors, businesspeople and politicians must overcome their aversion to these countries. He says his book is one-step toward erasing the "stigma" associated with them.

"People are still scared of all these places," O'Neill tells The Daily Ticker's Aaron Task in the above video. "People need to economically and socially start thinking about these countries in a very different way than they have in the past."

The 2008 financial crisis and the predicament facing Europe have paved the road for the BRICs countries to reassert themselves in the world. O'Neill points out that GDP in the BRICs nations has increased from $3 trillion to $13 trillion over the past 10 years.

"[That's] about the same as creating another U.S. economy," he notes. That number rises to $16 trillion over the current decade if you count the contributions from the MIST countries. According to O'Neill's calculations, that's double the aggregate amount both the U.S. and Europe will contribute in the same period.

Growth markets will "increasing be driving the global economy," O'Neill says. China in particular will flex its economic muscles in the years ahead, and O'Neill dismisses talk that China could soon be facing its own domestic economic collapse.

"Our future prosperity depends on China being successful," he says. "This idea that China only does well at everyone else's expense is nonsense."

He argues that international trade is a win-win situation but concedes that the BRICs nations have primarily benefited from the arrangement. These growth markets are demanding more and more of U.S. goods and China has shifted from a top exporter to one of the world's major importers since the 2008 crisis.

"At the current rate of import growth, China is importing the equivalent of another Greece every four months...and within five years from today China will be a bigger importer than the U.S.," O'Neill says. Furthermore, China may very well become Germany's "number one single export market" by this time next year, O'Neill adds, a reality very few could have predicted a few years ago.

As developed economies scurry to catch up to the BRICs, China and other growing markets may have a big advantage over their peers.

"The financial crisis taught the Chinese they cannot depend on exports" to the U.S. and elsewhere "for their future prosperity," O'Neill says.