China Will Struggle to Undo US Dominance

The hottest thing in global economics is an oldie but a goodie. This market darling is enjoying enviable growth and sucking in capital from around the world. It possesses a vibrant labor market and a currency that's not just a store of value, but increasingly seen as an ascendant strategic asset. And it’s not the China of yesteryear.

The lucky country is the US, a place so often said to have been on the verge of eclipse for various reasons such as big deficits, the euro and China's seemingly inexorable climb to economic supremacy. Numerous threats have fizzled or have been proven exaggerated. There's little denying that the past few years have seen a major shift in how the relative strengths and weaknesses of the two are assessed. For now, the US economy is in a good place, as a couple of new reports indicate. Perhaps the biggest threat comes not from outside, but has its origins in domestic strains.

The term de-dollarization has been fashionable in recent years. It's a pithy way of describing disillusionment with the greenback, in part because of sanctions against Washington's antagonists. Viewed cynically, this is a successor to dollar debasement, a conservative rally cry in the years immediately after the collapse of Lehman Brothers Holdings Inc., when the Federal Reserve embarked on massive easing. The dollar collapse didn't happen then and isn't occurring now, according to figures from International Monetary Fund sent to Bloomberg News.

The US attracted almost one-third of investment that flowed across borders since the pandemic erupted, a marked increase from the pre-Covid average of 18%, the IMF numbers showed. China's slice dipped to 3%, a bit less than half what is was in the decade through 2019. That jives with data from Beijing: Foreign investment slowed for a fourth month in April and is down 36% from the same period a year earlier.