From Mr William Gamble.

Sir, Gideon Rachman’s assessment of the US’s future (“Is America’s new declinism for real?”, November 25) is wrong, for one reason. The US can change. China can't. It's as simple as that. It's not about the inspiration of the Obama slogan. It runs deeper. It's about the institutions.

The US has flexible political, economic and legal systems that can adapt to changes in the environment. China doesn’t. Neither does Russia. Japan and India can change, but only very slowly. This is why I was correct in my predictions about the Chinese stock markets (“The coming crash in Chinese stocks”, Letters, May 15 2007). I also predicted the problems with the Russian, Brazilian and oil markets.

Contrary to the view of most commentators, China is facing some significant challenges and most likely a depression as deep as the US. Unlike the US, China will not recover as fast. Instead, like the Asian Tigers after the Asian crises, its growth rate will not recover.

As the great economist Mancur Olson pointed out, the power groups (distributional coalitions) will, over time, slow economic growth. The only thing that limits their power is the law, the institutions, the design mechanisms. If they do not exist, the system runs on trust. Once gone, without the framework it is impossible to regain.

William Gamble,
Emerging Market Strategies,
East Providence, RI, US