WHEN, 35 years ago, the World Economic Forum in Davos was founded, the focus was simple enough.

Europe’s miracle years of the 1950s and 1960s were still fresh in the memory. The opening-up of the European Union as a single internal market had a long way to run. Prospects for markets in the EU (then just the European Economic Community) appeared excellent, because there was still plenty of catching up with America to do.

American companies and their bosses were happy to come to the Swiss mountains to explore ways of tapping into that market. It was called a world economic forum but it was really a dialogue between America and Europe.

Now the focus has shifted. The Americans still come, in ever larger numbers, but now they come — particularly this year — to interact with businessmen and officials from China and India. That the forum is still in Europe may come to be seen as a historical accident, a passing moment before the world’s economic centre of gravity began to shift inexorably to the east.

This time last year the air was thick with warnings about the global economy, not least fears that high oil prices would derail growth in the industrial countries, just as America’s twin deficits were producing a disruptive dive for the dollar. Something had to give, and many thought it would do so in 2005.

Those fears haven’t gone away. One session at Davos looked at the consequences of a series of big terrorist attacks on sensitive oil targets, concluding that in those circumstances oil would rise to $120 a barrel and stay there.

Stephen Roach of Morgan Stanley, a longstanding bear on the American economy, continues to expect something nasty to happen, a deflating of the American housing bubble bringing to an end what he describes as “the great American spending binge”.

America is normally ahead of us but the debate over housing is reminiscent of Britain’s great housing-crash debate of a year or so ago. I can’t say whether the result will be the same, although some of the factors pushing house prices higher are common to both economies.

But there’s no sense of panic. Sessions on the risks of global terrorism attract less interest than those dealing with bread-and-butter business issues. Last year’s love-in with Hollywood stars and rock musicians has been replaced by something more practical. The view among business people here seems to be that you can only deal with what you know. Things you don’t know — and that includes bird flu — are best left to the experts.

What businesses do know, of course, is about the global economy’s shift to the east. This story is not new, it is just becoming more obvious by the year. China grew by 9.9% last year, passing Britain to become the fourth-largest economy in the world. Only America, Japan and Germany are bigger.

On a purchasing-power-parity basis, adjusting for relative prices and the Chinese currency’s undervaluation, China is already in second place to America and closing fast.

China’s ambitions have, however, barely scratched the surface. Zeng Peiyan, the country’s vice-premier, said China’s growth rate over the past 27 years had averaged 9.4%, and the aim was to double per capita gross domestic product over the period of the next, 2006-10, five-year plan. That looks overambitious. It would imply a significant acceleration in China’s growth rate at a time when there are already overheating worries and most economists are looking for growth to moderate to about 8% a year.

It is worth putting China’s ambitions into perspective. The country has a population if 1.3 billion and its per capita GDP is a mere $1,700 (£950). If it were to rise to $3,500, say over eight to ten years, that would leave China’s income per head at only a tenth of Britain’s now.

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