Is the U.S. the new China? Or vice-versa?
A hearing of the U.S. Senate Committee on Foreign Relations yesterday on the financial crisis gave some interesting insight into what — and how much — policymakers are thinking about China these days. While the three witnesses (Martin Wolf, George Soros, and Lawrence Lindsey) all spoke about the IMF’s role in the current crisis (for ...
A hearing of the U.S. Senate Committee on Foreign Relations yesterday on the financial crisis gave some interesting insight into what -- and how much -- policymakers are thinking about China these days.
A hearing of the U.S. Senate Committee on Foreign Relations yesterday on the financial crisis gave some interesting insight into what — and how much — policymakers are thinking about China these days.
While the three witnesses (Martin Wolf, George Soros, and Lawrence Lindsey) all spoke about the IMF’s role in the current crisis (for more on that, check out our debate here and here on The Argument), none could help themselves from pointing out that the current economic situation is a clear turning point for the world’s balance of power.
Here are a few exerpts:
The ability of the west in general and the U.S. in particular to influence the course of events will also be damaged. The collapse of the western financial system, while China’s apparently flourishes, marks a humiliating end to the "unipolar moment". As western policymakers struggle, their credibility lies broken."
– Martin Wolf
"When history is written, it will be recorded that – in contrast to the Great Depression – protectionism first manifested itself in finance rather than trade… If the multilateral system falls apart, every country will pursue its interests unilaterally. Then China will be much better situated than we are. While we are, regrettably, still lagging behind the curve in dealing with the crisis, China is ahead of the curve."
– George Soros
"…a second set of policy mistakes that led to this current crisis were decidedly non-American in origin. During the 1990s, many of the world’s newly developing countries, most notably China, managed their currencies in a way designed to increase exports and build foreign exchange reserves… China purchased hundreds of billions of dollars of U.S. Treasury and Agency securities, driving down our interest rates and facilitating the development of the housing bubble. The world saw the perverse economic result of Chinese workers and peasants being underpaid by their own government in order to finance the building of McMansions in America."
– Lawrence Lindsey
With as much China talk as there is in Washington these days, it begs the question: is the U.S. having a case of China-envy? Or has China replacing the U.S. role in the world economy?
Elizabeth Dickinson is International Crisis Group’s senior analyst for Colombia.
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