If you really want to know what the biggest threat to stability is over this century then it must surely relate to how the US will react to its loss of hegemony.  Oh, and global warming, of course.

And increases in the world’s population … and nuclear proliferation.

But, apart from those things, loss of US hegemony is number one. Well, it’s kind of number one if you ignore the things ahead of it.

But if we were to dream for a bit, and assume that somehow the US and China can get on a kind of detente with metal then, actually, there is reason to hope all those other problems can be dealt with.  So maybe this concern should really be number one after all. 

And that brings us to the here and now, and maybe reason for hope.

First of all, China has got off rather lightly in the US during the election season.  Both Mrs Clinton and Barack Obama have rattled their anti-trade sabres when talking about Mexico, but it is as if a Great Wall separates their rhetoric from China.

Then there is the yuan.  The US wants to see the yuan appreciate, China feels it is not yet ready to be thrown head first into the furore of full blown competition.  But, rising inflationary fears in China will take their toll, and only by allowing the yuan to rise can China really lick inflation.

But then yesterday, Alan Holmer, the Treasury Department’s special envoy to China, put a fly in the ointment. “The longstanding consensus in support of open economies shows signs of eroding in both our countries,’‘ he warned, and added, “While our growing economic interdependence was once a source of stability in our bilateral relations, it is now increasingly also a source of tension.’‘

He went on, Among Americans, trade is regarded as the most likely area of shared interests, yet it also ranks as the most likely source of conflict.

Meanwhile, Daniel S. Sullivan, an assistant US secretary of state, has called for China and the US to work together in trying to bring down the price of oil.

He wants China to join the International Energy Agency; “China’s participation in the IEA’s collective emergency response system would make the system stronger,” he said.

He added, “China might also consider a declaration that it plans to pursue membership in the IEA. This could help the anxiety expressed in some quarters over China’s intentions as it pursues greater energy security.”

None of the comments above really count for that much on their own, but in measuring the mood of the day they are key.

And how this mood changes over the next few years, with a new US president and after the Chinese Olympics, could determine the future course of this century.  There really is nothing that is more important.

© Investment & Business News 2013