No one model for new global economy

Second, there is the matter of the saving-investment balance. Asia, particularly China and Japan, are best advised to boost slumping domestic demand. China and Japan, along with the United States, should likewise strive to stem the rising tide of protectionist pressures within each country.

Third, China, Japan and the United States should take incremental steps toward the ultimate object of a form of trilateral consultation on macroeconomic policy. The best strategy is to ease into co-ordination through discrete bilateral platforms to be merged once conditions have seasoned sufficiently. Ultimately, trilateral co-operation will be most desirable, as Japan can ease and soften the US-China mutually-assured-destruction brand of a “balance of terror” in financial geopolitics. Even beyond the co-ordination of capital flow management, Japan has a leadership role in the environmental realm.

Fourth, there is a pressing need for currency realignment. The renminbi must appreciate vis-à-vis the dollar significantly in order to correct global imbalances in the coming years. Though discreet negotiations may still be coordinated between the two countries to realign the dollar against the renminbi in an orderly manner, US-China policy consultations should be confined for the time being to behind-the-scenes manoeuvring or risk instigating a dollar freefall, something that is not in anyone’s best interest.

Fifth, the coming years will likely witness an emerging diversification of global capitalist systems among the major global players, and China and the US should be open to new ideas for innovation from all corners. Perhaps the greatest trial is preventing the eruption of a similar crisis down the line. In the spirit of a shift from “curative to preventive medicine”, the preventive role of the central bank should be further expanded.

Finally, as Asian regionalism continues to deepen, the US must remain part of the process. To this end, the Asia-Pacific Economic Cooperation should be restored to its original format: a forum designed simply to promote trade and investment, while facilitating development and co-operation.

No longer can the international community point to one clear-cut model to guide the world markets, and the task of establishing a set of common rules is crucial. As the eastward shift of power accelerates, a robust Asia-Pacific strategy, with new US-Japan-China co-operation as its primary foundation, is critical for global economic stability.