Arvind Subramanian: Chinese Currency and American ‘Conceit’
A bank clerk counts a stack of U.S and Chinese bills at a bank in Huaibei, in eastern China’s Anhui province, on May 20, 2010. (AFP/AFP/Getty Images)
A new President of the United States is on his way to meet the Managing Director of the International Monetary Fund, who is a Chinese national, to ask him for money to salvage the American economony — possibly on the verge of collapse.
The year is 2021, and the premise is pure fantasy. But promoting his new book Eclipse: Living Under the Shadow of China’s Economic Dominance Tuesday night at Asia Society New York, Arvind Subramanian, a senior fellow jointly at the Peterson Institute for International Economics and the Center for Global Development, argued that the scenario is a very real and imminent possibility.
The United States, said Subramanian, regards China as the “next kid on the block” and doesn’t believe that the Asian tiger poses a real threat to America’s dominance in the global economic market. But challenging this premise, which Subramanian calls the “central American conceit,” was one of his motivations for writing the book.
“The Chinese currency — the renminbi — will eclipse the dollar around 2020,” Subramanian said, “and so this I think will not only ensure Chinese economic dominance but also currency dominance.”
In a conversation with Forbes.com columnist Gordon G. Chang and in a later audience Q&A, Subramanian described the economic metrics and policy factors he used to come to what some might call very radical conclusions about Chinese dominance (with India following not too far behind). The book comes at a crucial time, in light of the recent proposal by the U.S. Senate aimed at punishing China for keeping the yuan undervalued.
“The U.S is like an apartment block that used to be the envy of the neighborhood,” said Subramanian, citing a quote from Harvard economics professor Larry Katz. “Today, the penthouses have grown bigger and bigger. The middle floors have been squeezed. The basement is flooded and above all the elevators from the basement have stopped working.”
Watch the clip below (3 min., 17 sec.) to learn more about life in the shadow of China’s global economic dominance. Watch the complete program here.
In an earlier interview with AsiaSociety.org, Subramanian provides more details on his approach to making the case for China’s economic dominance.