Last week, Washington attempted two important policy feats aimed squarely in Beijing’s direction. U.S. Defense Secretary Ash Carter grabbed headlines by visitingthe South China Sea, after earlier announcing he would scrap a visit to Beijing amid rising tension over territorial disputes in the region.
Presider: Gideon Rose Speaker: Jacob S. Hacker Speaker: Stephen G. Brooks
Republican presidential candidates are calling for Washington to get tougher on an assertive China and reduce the size of the U.S. government. In a media call, contributors to the upcoming May/June issue of Foreign Affairs make the opposite case, calling for patience with China and a significant public role in boosting the domestic economy.
Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that the case for strong and effective Group of Twenty (G20) leadership is as compelling as ever. But if the G20 is to be as effective in noncrisis times as it was in 2008–2009, it needs stronger Chinese leadership, working informally yet closely with the United States—a Group of Two (G2) within the G20. Debt policy is one area where China and the United States should cooperate this year.
Leaked documents have revealed that international tax havens play a larger role than previously understood, and will likely raise pressure for more transparency in global finance, says CFR expert Edward Alden.
In his testimony before the Senate Committee on Foreign Relations, CFR President Richard N. Haass discussed the “slow motion crisis” that is growing U.S. debt, as well as its principal causes and its consequences for U.S. national security.
Over the past two decades, many developing countries have turned away from free market capitalism and toward modern state capitalism, which is a combination of traditional state economic planning and elements of free market competition. In his new book, Council on Foreign Relations Senior Fellow for Southeast Asia Joshua Kurlantzick argues that modern state capitalism is ultimately “more protectionist, more dangerous to global security and prosperity, and more threatening to political freedom” than free market economics.
Benn Steil’s latest op-ed in The Weekly Standard examines Paul Krugman’s continuing calls for fiscal stimulus, as well as his defense of government wage intervention and mercantilism. These have all been grounded in the assertion that the United States is in a “liquidity trap,” in which monetary policy is ineffective. Steil explains why the theory of liquidity traps is logically inapplicable when the central bank’s policy rate is positive, as it has been in the United States since December, and concludes that it operates as a fig leaf behind which to advocate policies with less scientific rationales.
CFR’s Global Monetary Policy Tracker compiles data from 54 countries around the world to highlight significant global trends in monetary policy. Who is tightening policy? Who is loosening policy? And what is the policy stance of the world as a whole? Learn more!
In testimony before the U.S.-China Economic and Security Review Commission, Elizabeth Economy discussed the economic components of the “rebalance to Asia” and its prospects going forward. She recommended that the U.S. Congress ratify TPP, continue to support the Ex-Im Bank, and increase support for NGO operations across the Asia-Pacific in fields such as legal education and anti-corruption that help promote good economic governance. She also called for greater coordination between commercial diplomacy and strategic economic plans and greater support for the proposed U.S. New Silk Road initiative.
Benn Steil’s op-ed in the March 30 edition of the Wall Street Journal, co-authored with Emma Smith, looks at presidential campaign charges that China is engaged in “currency manipulation” to boost net exports. They show that the aims of China’s pegged exchange rate regime have varied over the past two decades, and have not always been mercantilist. In recent months, with capital flowing out of China at a prodigious rate, its interventions have been to keep its currency up—not down. Launching a trade war with China over currency management, as Donald Trump and Bernie Sanders intend, would therefore be nonsensical—as well as damaging to U.S. interests.
Learn more about CFR’s mission and its work over the past year in the 2015 Annual Report. The Annual Report spotlights new initiatives, high-profile events, and authoritative scholarship from CFR experts, and includes a message from CFR President Richard N. Haass. Read and download »