Over the past decade, the Chinese and U.S. economies have fused to become one integrated system. Now the U.S. and China find themselves in an unfamiliar and challenging position. After years of seeking closer integration with the United States, China has begun to question the wisdom of that embrace. The United States, buoyed by China's loans, faces a level of dependency that has generated considerable anxiety. The intertwinement has enhanced the global economy but undermined the sovereignty that governments so crave.Yet, as Karabell argues, the fusion has advanced too far for either to extricate itself without severe harm.
The challenge for the United States is to embrace this new world even with some loss of relative power in order to ensure its prosperity in the future; the challenge for China is to recognize that it is now a major player on the world stage with all the risks and responsibilities that entails. We need them and they need us, but the jury is still out on whether either can fully accept that new paradigm.
Zachary Karabell is President of River Twice Research, where he analyzes economic and political trends. He is also a senior advisor for Business for Social Responsibility, which develops sustainable business strategies. Previously, he was executive vice president, head of marketing and chief economist at Fred Alger Management in New York; president of Fred Alger and Company; and portfolio manager of the award-winning China-U.S. Growth Fund. He was executive vice president of Alger's Spectra Funds, which launched the $30 million Spectra Green Fund, linking profit and sustainability.
Educated at Columbia, Oxford and Harvard (where he received his doctorate), he is the author of several books, including the upcoming Superfusion: How China and America Became One Economy and Why the World's Prosperity Depends on It. He sits on the board of the World Policy Institute and the New America Foundation and is a member of the Council on Foreign Relations. He is a regular commentator on CNBC and a contributor to Newsweek, The Wall Street Journal, the Los Angeles Times, The New York Times, Foreign Affairs, and the Washington Post.