The upcoming U.S. presidential election presents an opportunity to confirm, better define, or redefine America’s role in the world. Economic power and policy will have an important place in any conception of the United States’ role in the world. This report presents the strategic choices America faces regarding the international economy over the terms of the current and next U.S. administrations. The goal of U.S. international economic policy is to contribute to national economic growth and prosperity. Although the United States faces many choices regarding the global economy, this report focuses on policy choices in the areas of maintaining and improving the rules-based international economic system; working with China and better integrating it into the existing system; supporting the economic growth of allies, friends, and partners; and using economic tools to change unwanted behavior and counter adversaries.
The United States Remains a Leading Player in Global Economics
- U.S. growth prospects are better than those of any other major developed country.
- Nonetheless, the U.S. share of the global economy has been falling somewhat, largely because numerous developing countries are growing more rapidly.
The World Economy Faces Numerous Challenges
- Growth in most major economies either has slowed or is slowing; a major multilateral trade round has fallen through; global debt is increasing, especially that of emerging markets; and developing countries are slowing as well, stemming in part from China’s economic slowdown.
- In addition, parallel institutions are emerging, with unknown effect.
- Still, the rules-based international system that has evolved since the end of World War II is as beneficial now as it has ever been, and should be maintained and improved by key players.
The Rise of China Will Affect the United States
- U.S.-China trade and investment have grown rapidly. U.S. companies serve the China market primarily through their foreign affiliates in China, rather than trade.
- The United States will benefit most if China’s rise can be accommodated within the current global system. Not only are the two economies are intertwined, but many U.S. allies have sizable trade and investment relations with China.
- It is less clear how the United States should approach new China-led development institutions, specifically the Asian Infrastructure Investment Bank and the New Development Bank.