Senior fellow Arvind Subramanian's piece on China's growing power was featured in The Business Times.
From the Article
Even a resurgent United States could not exercise power and dominance over a rising China. China is already able to do what the rest of the world does not want it to do. Might it soon be able to get the US to do what the US does not want to do? Is another Suez crisis possible?
Rising challenge: Today, even as the US economy is structurally weak, its addiction to debt has made the country dependent on foreigners and its prospects for growth are minimal, a strong rival has emerged. China may not quite be an adversary, but it is not an ally, either
In 1956, with sterling under pressure because of Egypt's blockade of the Suez Canal, the United Kingdom turned to the US for financial assistance, invoking their 'special relationship'. But US president Dwight Eisenhower refused. He was furious that the British (and the French) had attacked Egypt after president Gamal Abdel Nasser nationalised the canal, just as he was campaigning for re-election as the man of peace who had ended the fighting on the Korean Peninsula. He demanded that the UK comply with a US-sponsored United Nations resolution requiring the prompt and unconditional withdrawal of British troops. If it did not, Washington would block the UK's access to resources from the International Monetary Fund (IMF). But if it did, it would get substantial financial assistance.
The UK agreed, and the US supported a massive financial package, including an unprecedented IMF loan worth US$1.3 billion and a US$500 million loan from the US Export-Import Bank.
Now, imagine a not-so-distant future in which the US has recovered from the crisis of 2008-10 but remains saddled with structural problems: widening income gaps, a squeezed middle class and reduced economic and social mobility. Its financial system is still as fragile as before the crisis, and the government has yet to come to grips with the rising costs of entitlements and the build-up of bad assets in the financial system, which the government might have to take over.
Inflation is a major global problem because commodity prices are skyrocketing as a result of rapid growth in emerging markets. China has an economy and a trade flow twice as large as the US. The US dollar has lost its sheen; demand for the yuan as a reserve currency is growing.