While the U.S. has been tied down in Iraq and Afghanistan, Russia and China have surged ahead economically, militarily and as “super powers” with immense wealth and global influence. And the U.S. may now be facing an economic downturn.
Like the giant Gulliver from “Gulliver’s Travels” by Jonathan Swift, the U.S. has seemed at times “tied down” by the little people. Now, with oil prices rising, some economists are saying “The ‘R’ Word” (recession) for the near-term U.S. economy.
Meanwhile, Russia and China are flush with petro-dollars and not looking back. Militarily, Russia and China conducted, for the second straight year, unprecedented joint military training exercises. And diplomatically, Russia and China have thwarted attempts by the U.S., U.K. and others to stifle Iran’s nuclear ambitions.
Huge trade surpluses have swelled the foreign exchange reserves of China and Russia as they export more manufactured goods and produce more oil.
Now globalization faces a real test: the rapid rise of state-run investment arms by China, Russia and other cash-rich nations.
Strangely, against all this as a backdrop, in the presidential primary debates to date there seems to be more interest in social issues like gay marriage, healthcare and immigration. While these and other issues are important they ignore the elephant in the living room: the world’s only super power has re-invigorated rivals of the most dangerous sort.
Newt Gingrich has spoken eloquently about the future of America on a grand scale but he has already excused himself from consideration for the White House. The others, it seems to us, have been too silent on the bigger issues of the world.
At the G-7 meetings this past weekend finance chiefs planned to ask China and other nations to give more data on state-run fund activities.
These countries want to earn better returns on their massive currency reserves, but some in the West fear sovereign wealth funds may try to control strategic assets or invest for geopolitical reasons. The Group of Seven nations — the U.S., Japan, U.K., Canada, France, Germany and Italy asked China re-value its currency – and idea rebuffed before.
The deputy governor of the Chinese central bank, Wu Xiaoling, insisted that Beijing was moving to reform its exchange rate mechanism.
“Moving the exchange rates in the absence of economic restructuring policies will hurt China,” Wu told a forum at the Peterson Institute of International Economics.
“Since China is one of the driving forces of the global economy, this will accordingly hurt the global economy. Therefore China’s authorities decided to reform the foreign exchange regime in a controlled manner on its own initiative and in a gradual fashion.”
In other words, we’ll restructure when we want because what is good for China is good for the global economy.
Chinese President Hu Jintao was also the bog winner during the Communist Party Congress, wrote Chris Buckley from Reuters on Sunday.
"Chinese Vice President Zeng Qinghong retired from the Communists’ upper ranks on Sunday, bolstering Party boss Hu Jintao’s grip on power and clearing the way for a younger generation of potential successors.