This month's featured article
Japan in the Middle: The geo-economic conflict between China and the United States
Speaker: C. Fred BergstenNonresident Senior Fellow and Director Emeritus, Peterson Institute for International Economics (PIIE)
Propositions about the global economic order
There are three propositions concerning the future of the global economic order. The first proposition is that an open and cooperative international economic order has played a crucial role in fostering prosperity and peace during the entire postwar period. Japan has been the most remarkable example of that system’s success. In this context, China’s growth may be parallel to Japan’s, but Japan’s average income far surpasses China’s.
The second proposition is that the successful international economic order, though not perfect, has heavily relied on the global economic leadership of the U.S., collaborating with key allies. Political scientists have called the concept “hegemonic stability theory,” which posits that effective leadership from one country is essential for the system to work effectively. While the concept may be debatable, the U.S.’s effective leadership throughout the postwar period has been a critical factor contributing to the overall success of the international economic order.
The third premise is that the U.S. can no longer play its previous role to the same extent due to the rise of China as a significant global player. In the last 100 years, the U.S. held a dominant position as the world’s leading economy without any serious challengers. Japan came closest to challenging the U.S. during its period of rapid growth when its gross domestic product (GDP) reached around 80% of the U.S. GDP.
China’s global economic dominance
Nevertheless, the U.S. never faced a true rival for the top economy until China’s rise. China now provides that challenge as a formidable competitor which in many metrics is bigger than the U.S., in terms of trade and foreign exchange reserves.
Given this scenario, China’s participation is crucial in resolving global economic issues, such as climate change, open trade, financial and macroeconomic crises, and pandemics. Therefore, it is essential to integrate China into the global economic leadership matrix, enabling or encouraging it to take on responsibilities, cooperate with other nations, and work towards shared objectives. Thus, finding ways to incorporate China into this cooperative leadership position is vital for the global economic system, which requires collaboration between the U.S. and its allies, and China.
To read the full text:
“International Economic Policy for Asia in an Era of Great Power Strategic Competition”
Shiro ARMSTRONG (Visiting Fellow, RIETI)
“Japan’s strategic opportunity at global leadership”
Shiro ARMSTRONG (Visiting Fellow, RIETI)
“New Era of APEC & International Economic Order in the Asia-Pacific Region”
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“CPTPP and Beyond: Multilateralism in an era of great power strategic competition”
“Australia, Japan, ASEAN and Economic Security in Asia”
“Asia's Response to the Collapsing Consensus on Trade”
Speaker: Deborah ELMS (Founder and Executive Director, Asian Trade Centre / President, Asia Business Trade Association)
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