By a twist of fate, the world’s two most powerful countries will select their new leaders in the same week. On the surface, they are almost perfect mirrors of each other.
While the U.S. election promises a nail-biting finish, the results are likely to be predictable. In Beijing, the next leader – Xi Jinping – was ordained several years ago to be appointed General Secretary of the Chinese Communist Party at the Party Congress this week.
In the economic realm, the two countries’ trajectories are at odds. While Washington is suffering from an austerity crisis, China is coming to grips with a crisis of affluence. In the U.S., as Thomas Byrne Edsdall argues in his book The Age of Austerity, “The two major political parties are enmeshed in a death struggle to protect the benefits and goods that flow to their respective bases, each attempting to expropriate the resources of the other.”
In China, leaders have the resources to stimulate another decade of double-digit growth. However, they know their economic model, based on cheap exports and domestic investment, is unsustainable in the long run. They know they need to end artificially low interest rates and build a social safety net to encourage Chinese citizens to consume more. The problem is that they do not know how to rebalance the economy without harming the interests of the crony capitalists who support it or the middle class that has benefited from China’s rise. China’s pursuit of affluence could become a trap from which it may struggle to escape.
While both nations are focused on their global standing, they have opposing problems in the foreign policy realm. In Washington, neither President Barack Obama nor Governor Mitt Romney dares talk about the decline of American prominence in the global economy, but they grapple with the challenges of reconciling America’s will for power with the war-weariness of its citizens.