The US still runs the world

REPORTS of the death of American power have often been greatly exaggerated. In the 1950s, the Soviet Union was thought to have surpassed the United States; today, the Soviet Union no longer exists. In the 1980s, Japan was widely regarded as on the verge of overtaking the US; today, after more than two decades of Japanese stagnation, no one would take this scenario seriously. And in the 1990s, monetary union was considered likely to propel Europe to greater global prominence; today, the European economy is frequently in the world's headlines, but not in a good way.

Now, it is China's turn. Until recently, China, in many people's view, was poised to assume global leadership, if it had not done so already. Today, doubts about the Chinese economy's long-term prospects are rattling stock markets worldwide (including in the US).

China matters, and its economic policy - including how the exchange rate is managed - must be taken seriously. But China does not run the world, and it is unlikely to do so anytime soon. The potential for global leadership still rests, believe it or not, with the US.