Thought I’d share a recent article in Foreign Policy Magazine by Ian Bremmer, “On the Economy, Be Careful What you Wish For.” Mr. Bremmer’s main thesis is that even if economists all but unanimously believe that the best way to solve the trade imbalance between the US and China is for the Chinese government to let their currency, the renminbi, to rise that this may solve short term imbalances but will only accelerate the long term decline of the US economic, political, and strategic influence in Asia.
Mr. Bremmer contends the US financial crisis, and the resultant long climb out of the Great Recession, has made Chinese leaders re-think about being tied to so closely to the US economically. As a result, a de-coupling is occurring where China is looking less and less at the US to sustain its economic growth and more toward is own market and that of its Asian neighbors. The long-term implications for the US strategically is that it will have a harder time exerting its influence in Asia as China’s political and economic influence in the region grows.
This argument is really not new. Policymakers have been warning for some time that the US’ influence in Asia will eventually wain as China becomes stronger. But Mr. Bremmer’s point is that this process has become accelerated largely because of the US financial crisis and the Great Recession that followed. Here’s the link to the article: