Trump made the case that only he could effect change by blowing up the system. Modi, in the same way, did have a persuasive narrative that small changes at the margins can’t tackle deep-rooted problems like corruption. We needed big and painful changes, really disruptive ones.
They are following in the footsteps of politicians of all stripes who have found it convenient to blame the boogeyman of unfair trade for domestic economic problems. Tough talk on trade is an easy way to distract attention from taking on difficult domestic challenges.
The recovery is strengthening. But the rest of the world is weakening. Everywhere you look around the world, China, Japan, Europe, even countries like Germany that were doing well, are looking very weak. So, the question is whether the U.S. can sustain the global recovery on its own back.
The economic recovery in most of the advanced economies, except for the U.S., is still quite fragile and the geopolitical uncertainty certainly adds to the lack of confidence. But is the IMF going to step in in a big way? As of now, no.
The financial crisis had its origins in the U.S., the federal reserve has been pumping huge amounts of dollars into the global financial system, which ought to cheapen its value. [But] in times of turmoil, the world wants safety, and the U.S. is still seen as the safest place to invest.
The emerging markets [are] largely viewing monetary policy in advanced economies as causing problems for them and the advanced economies are basically taking the position that the emerging markets are chronic complainers.
The traditional flashpoints between the two countries, the currency issue and trade have diminished as flashpoints. The real opportunity here lies in the fact that China and the U.S. now have a commonality of interests.