End of QE, not of US financial supremacy

The Federal Reserve has officially announced an end to the third round of its quantitative easing bond-buying program. To deal with the financial crisis and make up for the failure of the US government to adequately stimulate the economy, the Federal Reserve has generated trillions of dollars for the American economy in the past six years. It shifted its own financial burden to the rest of the world to some extent.

Europe and Japan also adopted the policy of quantitative easing, albeit with little result. But the US achieved its goal. The fundamental reason is that it is the dollar, rather than the euro or the yen, which is the world's currency for clearance and reserve. The US dominance of the world's financial system has remained quite solid.

When the US pushed forward this policy of quantitative easing, the world complained because the US was dragging down countries and institutions that hold US dollars. Now that the US government and the Federal Reserve have gained some confidence, quantitative easing was abandoned. But Washington has shown indifference to the world's reactions.

In the past six years, there has been much discussion of US decline. The situation in Iraq and Afghanistan enables people to see the limitation of US influence, but the capabilities of US systems still surpass those of other countries. These capabilities are more than enough to maintain the US as a global superpower when it is at the center of a global crisis.

Some media recently speculated that on the purchasing-power basis, China is overtaking the US and becoming the world's biggest economy. China's GDP has been supported by low-end economic activities. It has a long way to go to build up its high-end economic capabilities and build financial systems. Besides the economy, China lags behind the US in terms of national defense, soft power and diplomatic partnerships.

To put it more precisely, China cannot compare with the US. But comparing the two has been popular both within and outside China. Chasing or passing the US can hardly become a China policy. China needs to undergo a tough process to make it stronger.

Both China and the US should keep a sober mind to discuss the possibilities of big power relationship patterns in the 21st century. US financial dominance indeed makes China uneasy, while China takes the initiative to establish an Asian infrastructure investment bank, the US is highly alert and tries to exclude its allies such as Australia and South Korea.

China is clear about its gap with the US. How to narrow it is not only an issue for China, but also for both. The US will not be able to monopolize the world's development opportunities. Its material decline is real, and only when it adds flexibility to the current world order, can its interests be maximized. In the international community, when the strength of a superpower is declining, its morality will be tested.