Agenda

Economic recovery seems finally to be taking hold in the US. However unemployment remains doggedly high and it is unclear how long the Fed will have to maintain its easy monetary policy to encourage consumer and business spending. The US fiscal deficit is a key challenge, with calls for urgent tax reform and curbs on public borrowing, progress on which will be closely watched by financial markets. Is the US administration adopting the optimum policies to support recovery and reduce the deficit? How can it cope with sustained high unemployment? What is required to increase America's economic competitiveness at a time when public spending must be controlled?

American business arguably is facing its biggest challenge since the Second World War. Globalisation has brought new markets but also new competitors - economies with lower production costs and in some cases a managed currency. To begin with, the competition was focused on lower-cost, high-volume products like shoes and textiles; now the value added is much higher. Countries like China are becoming market leaders in R&D-heavy sectors like clean energy where only a decade ago the US would have been expected to dominate. At a time of high unemployment in the US, this is particularly damaging to confidence and political stability. Who is benefiting in the US from the globalization of US business? President Obama has responded by forming a special advisory council on competitiveness and making innovation one of his strategic national priorities. What measures should be taken? What opportunities should be emphasised and how will success be achieved?

China is now the world's second largest economy and could in the not so distant future overtake the US as the largest. It holds substantial influence in the global economy and financial system, with huge foreign exchange reserves and larger holdings of US Treasury bonds than any other country. Despite inflationary pressures at home, China's exports remain highly competitive, with the impact of rising labour and land costs cushioned by an undervalued currency. As Washington continues to lobby for the renminbi to be allowed to float freely, US firms must find ways to benefit from the still buoyant Chinese market and compete more aggressively with China's drive into global markets, including the US where jobs are at stake. How can the US live with a rising China? What is the optimal political stance? How should businesses adapt?

As the American Century makes way for what some are calling the Asian Century, China and other large emerging economies are gaining increasing influence in diplomatic forums, boosted by their economic strength as well as geo-political factors. Trade is playing a significant role - large investments in Africa and Latin America, for instance, are positioning China positively for the rapid growth expected in these regions in the next few decades. Militarily, the US retains the largest force, but its power to influence regional politics appears increasingly constrained. Is the US losing its dominance in global politics? Is its ability to maintain diplomatic competitiveness hamstrung by the divisiveness of its domestic politics, where criticism of the current administration by some opposition groups has been more vituperative than seen in many years?