As American Hegemony Disintegrates,Who Will Take the Lead?

In the last 60 or so years, the order and stability of international trade and finance, coupled with a relatively peaceful international environment, have been the foundation for the global community’s rapid growth. Called the contributing factors toward international public wealth, they primarily come from the sole support of America’s hegemony. Nevertheless, since weathering the financial crisis, America’s ability to provide international public wealth for the world has gradually diminished.

If the situation of gradually diminishing international public wealth cannot be reversed, then the global community’s structural pressure, resulting from a lack of an authoritative power, will cause nations to adopt a narrowly self-beneficial course. It’s very likely that the world will undergo a new shift in power arrangements, igniting a conflict of interests.

Firstly, the global financial system is currently stuck in a standoff between those who wish to change the system and those who are benefiting from it. But neither side has the will to resolve the situation and take leadership. There has been no breakthrough in the Doha Round discussions of the WTO, and the World Trade leader-level meetings, which began in Hong Kong in 2005 and were to continue bi-annually, have not been held since. Global free trade faces the recurring challenge of trade protectionism. In the financial crisis, the performances of the IMF and World Bank have been amiss, facing the pressure of necessary reforms. China, India, Brazil, and other countries have cried out loudly for reforms to global trade and financial systems, but these new powers do not have the power to change the situation. On the contrary, America and other beneficiaries can but approach change with stagnation, finding safety in routine.

Secondly, America’s self-interested measures, taken in the wake of the financial crisis, can perhaps be seen as a sign of the end of hegemony’s contribution to global public wealth. This may arouse the fears and suspicions of other nations, increasing global uncertainty. People’s Bank of China Vice-President, Hu Xiao-Lian, recently followed Chinese Premier, Wen Jia-Bao, in expressing that America’s policy of printing money to relieve their financial crisis was a security concern to China as an American creditor. Today, both America and China are bound by mutual economic trade dependence, but in the advent of a crisis, China has reservations about a “growth-feedback” interchange method which supports the vitality of the American market at their own expense. Additionally, the prestige of America’s continual, orderly economic trade operation is slipping. China’s increased suspicion of America reflects the uncertainty of whether it can continue to provide public wealth, a sore concern of the newly developed nations.

Lastly, providing international public wealth requires huge material capital, and the series of measures adopted by the Obama government to soften the impact of the financial crisis have not yet achieved visible results. But they may deeply damage America’s strength, making it difficult to again play the role of supporter of global public wealth. Not only is there no power capable of being an alternative provider of global public wealth in today’s international society, there is a lack of regional or global systematic plans to provide for this shortage. Whether or not America can weather this financial crisis, the American dollar’s position as the global financial and trade currency has been heavily shaken. The orderly flow of global trade is threatened by protectionism, and even the myth of America as the world policeman maintaining global security may become history.

As the ability and willingness of America to provide global public wealth wanes, the uncertainty of the global situation will rapidly increase, becoming an obstacle to the cooperation of large nations, creating more security problems, and throwing an unnecessary shadow over the cooperation of the world powers. An even greater problem is: When the world sinks into a situation of the collapse of global public wealth, who will arise to restore political and economic order? Or will the nations have to undergo a bloody competition to see who gradually emerges as leader?