In November 2012, I found myself at the Trident Hotel in Mumbai—one of a tiny handful of Americans attending a forum, sponsored by prominent Indian and Chinese business organizations, on Asian financial integration.
There is something a bit unsettling about being nearly the only American at a discussion of financial order held not on the Potomac, East, Hudson, or Thames, but near the banks of the Mithi River. And surely there is something deeply symbolic about a forlorn group of Americans listening to power brokers from China, India, Japan, and elsewhere discuss how to remake the financial order on a pan-Asian basis. After all, the United States has dominated global finance in the postwar era, which is a byproduct of the unique role of the U.S. dollar, the United States’ weight in global institutions, and the best-in-class status of so many U.S. financial services firms, among other factors.
Yet Americans should not be so surprised. Heavy symbolism aside, such meetings are the outgrowth of trends that date at least to the Asian financial crisis of the late 1990s. Indeed, they are not new, nor were they invented by Beijing—although China, it is true, has sought to leverage them to its advantage. They will remain a lasting feature of political and economic reality in Asia. And they are almost certain to pose a growing competitive challenge to U.S. leadership in the Pacific.
Washington should not shy away from this competition. The United States can and should adapt and compete. But doing so will require, first, a clear understanding of the depths and origins of change in Asia. Put simply, the United States cannot succeed, in either geopolitics or business, unless it properly understands the sources of its competition in the first place.
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