In the New York Times, Philip Bowring writes that while much of the world has “chafed against” U.S. exceptionalism in the global economic order, in fact China enjoys an exceptionalism that is contributing to global economic imbalances:
For sure, the United States has been in an exceptional position and one that has enabled it to consume more than is good for it. Many countries, with China the most vociferous, wish for a more balanced world in which other currencies play significant roles in trade finance, capital flows and exchange reserves.
But while the cries against U.S. privileges ring out loud and clear, scant notice is taken of the exceptionalism successfully pursued by China. Beijing has so far insisted on maintaining both a pegged currency and controls on capital flows.
All of North America, Europe and Japan have no controls on capital flows and have fluctuating exchange rates. Ditto for South Korea, Taiwan, Australia, South Africa and most of trade-oriented Southeast Asia. India has some exchange controls but a floating currency, which is also the norm in South America.
This exceptionalism has helped China accumulate over $1 trillion in foreign reserves, that it naturally thinks should give it clout in the world. But where would China be if that exceptionalism were removed?