The most recent Federal Reserve estimates suggest that the US productivity machine is humming and that US economic potential growth is likely to be about 3 per cent for the foreseeable future. This would be not only a triumph for free-market economics but would place the US economy in a class of its own among the world’s more mature economies.
Yet a dangerous myth is stalking international financial capitals. It is the idea that China has finally awoken and that the 21st century is going to belong to Asia.
This myth overlooks China’s fundamental political weaknesses. It also turns a blind eye to China’s economic clay feet and its many economic vulnerabilities. As such, it unnecessarily stokes American fears about the rising Chinese dragon and runs the danger of spawning protectionist pressures, which could undermine the global trading system.
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