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With China leading the way, most Asian economies are experiencing rapid growth and rising income levels. However, there is a risk of an overheating economy with such a rapid trajectory—as seen in rising inflation rates in many countries.
While many of the world’s nonproliferation measures concentrate on weapons of mass destruction, the majority of damage and deaths continues to come from conventional weapons.
Although President Hu Jintao's state visit to Washington helped stabilize U.S.-China relations, Beijing needs to prevent future bilateral tensions by pressuring North Korea to change its behavior, scaling back its own economic protectionism, and reassuring its neighbors.
Although Beijing will likely raise interest rates in the short term to cope with inflation, growing speculative activity by Chinese companies poses a long-term threat to China's economic growth.
While the obsession with global rebalancing stokes currency and protectionist tensions, it diverts attention from what is really needed—reforms at home.
If asset prices and currency values overshoot and inflation surges, there is a risk that emerging markets will be hit with another potentially devastating financial crisis.
The increased use of intermediate inputs in world trade distorts bilateral trade balances, reduces the importance of exports as drivers of demand, and hides the true cost of protectionism.
Although an appreciation in China's currency value could benefit the United States in theory, Chinese leaders would likely counterbalance such a rise with policies that could further damage both the Chinese and U.S. economies.
The United States and China can work together to find common economic ground on issues such as trade imbalances, the value of the renminbi, and technology transfers.
Despite debate about when the Chinese economy will be larger than that of the United States, hidden income, a potentially undervalued currency, environmental degradation and wasted investment make it difficult to determine the true size of China's economy.
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