1. Terror, Financial Crisis and a Changing Balance of Power
The 21st century opened with a terrorist attack that changed global security, a financial crisis that shook the world economy, and the steady rise of China as a major economic power. This lesson covers the key facts exams ask.
9/11 and after
- On 11 September 2001 the terrorist group al-Qaeda hijacked four planes and attacked the World Trade Center in New York and the Pentagon near Washington. Nearly 3,000 people were killed.
- NATO invoked Article 5 (collective defence) for the first time; it remains the only time so far.
- A US-led coalition entered Afghanistan in October 2001 and removed the Taliban government. In 2003 a US-led coalition invaded Iraq and removed Saddam Hussein.
- Osama bin Laden was killed by US forces in Abbottabad, Pakistan, in May 2011.
- US and NATO forces left Afghanistan in August 2021, and the Taliban returned to power in Kabul.
The 2008 global financial crisis
- It started in the US housing market, where many risky ('subprime') home loans had been given and then bundled into complex financial products.
- The US investment bank Lehman Brothers filed for bankruptcy on 15 September 2008, the largest bankruptcy in US history.
- The crisis spread to banks and economies worldwide, causing the 'Great Recession'.
- The G20 held its first leaders' summit in Washington in November 2008 to coordinate the response.
- India was affected less than many countries, partly because of its regulated banking system.
The rise of China
- Deng Xiaoping began economic reforms and 'opening up' in 1978.
- China joined the WTO in December 2001 and became the 'factory of the world'.
- In 2010 China overtook Japan to become the world's second-largest economy (in nominal terms).
- Xi Jinping became leader in 2012–13 and launched the Belt and Road Initiative (BRI) in 2013. India has not joined the BRI and has objected that its China-Pakistan Economic Corridor passes through Pakistan-administered territory that India claims.
- In 2023, UN population estimates showed India overtaking China as the world's most populous country.
- 9/11 attacks
- 11 September 2001, by al-Qaeda
- NATO Article 5
- Invoked only once, after 9/11
- Iraq war begins
- 2003
- Lehman Brothers bankruptcy
- 15 September 2008
- First G20 leaders' summit
- Washington, November 2008
- China's reforms begin
- 1978, Deng Xiaoping
- China joins WTO
- December 2001
- Belt and Road Initiative
- 2013, Xi Jinping
💡 2001 is a double year for exams: the 9/11 attacks (September) and China joining the WTO (December). The SCO was also founded in 2001.
📝 5-question quiz on this lesson: enrol free to take it and track your score.