Posts Tagged ‘ Obama ’

USA/China Elections – Shifting Cliffs

It is quite uncommon to have two of the world’s most powerful nations choosing their leaders at the same time. Today, American voters will decide who will become the 45th President of the United States. On Thursday, in the Far East, the National Congress of the Chinese Communist Party will meet to announce who they have chosen to lead the world’s most populous nation for the next decade.

While China selects its leaders behind closed doors, American’s elect theirs after months of public campaigning. Paradoxically, the identity of China’s next leader – Xi Jinping, is public knowledge. The next occupant of the White House, however, remains a matter of speculation for political polls and stock market pundits alike. Both events should be followed closely, as their outcomes would have significant effects on global economic growth and political stability, and perhaps could set the tone for the international political economy.

For the next American President, containing China’s economic rise and influence will remain the focus of his foreign policy. Xi Jinping on the other hand, will be eager to ensure that China’s growing geopolitical influence and economic might do not threaten Sino –US bilateral relations. Interestingly, the next leaders of both countries are immediately confronted with internal challenges, which if not approached with tact and pragmatism, could define the geopolitical landscape over the next decade.

For instance, the next American President’s priority will be to resolve the conundrum popularly referred to as the Fiscal Cliff – a situation where spending cuts and tax increases will be triggered automatically on January 1, 2013. This cliff-hanger presents the possibility of America experiencing a fiscal tightening equivalent to about 5.1% of GDP, effectively tipping the (global) economy back into recession. Balancing the drive for economic growth with the need to reduce its huge budget deficit will also be at the forefront of America’s economic policy.

Xi Jinping will contend with slowing growth and the increasing clamour for economic and political reforms. Official controls will have to give way for the free interplay of market forces and China’s internal economy will need to be opened up in order to make it more productive. However, the more difficult challenge will be restructuring the political system. Failure to do so will leave China on the brink of a ‘revolution cliff’ – an uncertainty which the rest of the world would rather do without.

As we follow the elections in the USA very keenly, it is important to keep an eye on the selection taking place in China; perhaps history will remember this week as representing a baton change in the global economic order.

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