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doug saunders

In the years after the Second World War, the bomb-ravaged capitals of Europe swarmed with American businessmen, bankers and Federal Reserve officials, combing the ruins for places to stick investments, loans and infrastructure funds.

In the process, they built both productive European economies that repaid their investments in dollars and traded across the Atlantic, and a consumer market that bought American products (and took American loans to buy them), creating the central plank of what we call the postwar order.

You could argue that the postwar order came to a symbolic end this year, as the United States for once found itself in no position to be the backstop of failing economies. Its finale might have been the sight of Chinese businessmen, bankers and national bank officials combing over the economic ruins of Greece. Beijing has bought 35-year ownership of the giant shipping port of Piraeus for €3.4-billion, offered half a billion for Athens airport, given €4-billion in loans to upgrade the Greek shipping fleet (as long as it's done in Chinese shipyards) and hinted at much larger, longer-term loans and investments in exchange for deeper access to consumer markets.

That, and the fact that Beijing has a US$3.2-trillion pot of surplus money, has led to a widespread sense that the end of the euro zone's downward spiral might come from the east, in the form of a massive stake in the world's largest economy by the world's most populous country.

But the Chinese aren't coming. There's not going to be an economic Pax Sinica, or even a joint U.S.-Chinese guarantee of stability.

To understand, you need to look at China's own crisis. No, it's not one of debt, or of decline: China's economy grew by a staggering 9.1 per cent over the past year. But peek inside, and you realize that China in 2011 is not the United States in 1947:

Overheating: In July, China's inflation rate was a record 6.5 per cent, and while Europe's troubles stifled exports and pushed the rate down to 5.5 per cent this month, this is still an overheating economy, pushing up the yuan and threatening to dissolve that $3.2-trillion pile of cash.

"In one to two years, our trade surplus will be zero," Beijing central bank adviser Li Daokui said this week. As China shifts from exports to its own struggling consumers, it will face new, tough fiscal challenges – especially if that growth collapses in a real-estate crash.

Wealth flight: Fearing just such instability, "about 60 per cent" of Chinese millionaires have "already begun the process of emigrating or are considering doing so," according to a pair of recent studies, one by Bain & Co. and another by Bank of China. And there is plenty of evidence that those millionaires and billionaires are sending the lion's share of their wealth out of the country.

Shrinkage: Underlying these problems is one that Europe and China share: A population that is no longer growing very fast and is quickly aging. The proportion of the population that depends on the state for pensions and medical care is overwhelming the proportion that works and pays taxes to the state.

"The era of uninterrupted supplies of young, cheap Chinese labour is over," demographer Feng Wang writes. China is already using immigration to attract cheaper labour to its southern provinces. It is shifting from the tough problems of growth to the more expensive problems of shrinkage.

I'm interested in the prognosis of Adam Posen, the American-born Bank of England economist, who these days is arguing that we're returning to the "old normal" of global economics – the situation the world found itself before the interruptions of the two wars and the postwar American-led interval.

That period, peaking in the late 19th century, was one when trade and investments were very globalized (arguably more so than today), but there was no dominant currency or all-powerful economy gluing the whole thing together – so things were much more unsteady and volatile, prone to market panics and sudden deflations.

"We're moving to a world where basic economic integration will continue but there will be more ad hoc national interests and national policies," Dr. Posen said in a speech recently.

That might sound like a dangerous state of affairs. But remember that the old, superpower-driven system was itself unstable. Its risks involved trillions of dollars stashed in China, and trillions in debt accumulating on the other side, all waiting to tip into disarray. Maybe it's better to have smaller, more frequent crises that don't stop the whole world.