Is China poised to take over from the United States as the world’s leading economy? Yes, judging by its GDP, trade flows, and ability to act as a creditor to the rest of the world. In fact, China’s economic dominance will be far greater and come about far sooner than most observers realize.
China’s rise is overstated, and its financial problems are massive, argues Derek Scissors. Arvind Subramanian disagrees, claiming that Beijing already calls the shots in the global economy.
Trade problems are an underlying cause of the financial crisis. To truly revive the world economy, a new trade consensus is necessary.
Increasing aid and market access for poor countries makes sense but will not do that much good. Wealthy nations should also push other measures that could be far more rewarding, such as giving the poor more control over economic policy, financing new development-friendly technologies, and opening labor markets.
As the international community debates whether the recent discovery of huge caches of untapped mineral deposits will be good for Afghanistan, it would do well to consider the similar challenge posed by Iraq's oil reserves. In this article from the Foreign Affairs archive, Nancy Birdsall and Arvind Subramanian write that vast wealth from natural resources can often be a curse, not a blessing.
