If a country becomes an enemy of the United States, it will be excluded by these international organizations and international markets. As a rule maker, the United States has made reforms to these organizations in its favor. For instance, the IMF decided to carry out measures to promote the completely free flow of capital in 1997, eliminating capital controls in many countries. In the same year, the WTO reached an agreement on the free flow of global financial services, aiming to allow any financial service provider to freely enter its member states and receive national treatment. Undoubtedly, these reforms are beneficial to the United States because of its leading economic power.

After the September 11, 2001 terrorist attacks, the United States tightened its control of the international financial sector by freezing funds of terrorist organizations and countries blacklisted by the United States for sponsoring terrorism. The Libya issue reflected the might of U.S. financial hegemony. The United States and its allied countries froze the overseas assets of Muammar Gaddafi's government and provided the opposition with military supplies to overthrow Gaddafi, translating financial prowess to political might. This is evidence that the U.S. financial supremacy is not to be underestimated and will last well into the future for all its economic woes.

Courting emerging markets

To prevent the collapse of the U.S. dollar hegemony, the United States needs to overcome difficulties with the help of emerging economies.

Though the U.S. financial hegemony can help its companies grasp key technology, funds, materials and overseas markets, the hegemony hurts its national economy. Because of the leading position of the U.S. dollar, over the past several years most capital in the United States has been gathered in the financial sector instead of the manufacturing sector. The real economy of the United States has been damaged by this big financial bubble. Enlarging trade deficits mean that U.S. industry is losing its advantages and many of its businesses have retreated from international markets, though the United States still takes the leading position of science and technology around the world.

The outbreak of the global financial crisis in 2008 showed that the U.S. economy had become more frail and unsteady. The privilege of issuing the dominant international reserve currency has proven a curse for the United States. It has lured the country into too much borrowing or printing too much money. Over the long haul, this could shake the economic and political foundations for the privilege.

While trade deficits persist, debt—both public and private—has reached unprecedented levels. These chronic problems will have negative economic consequences for the United States. If that happens, U.S. military superiority would be difficult to maintain. So the U.S. Government clearly knows that addressing economic problems is the most important task right now.

The current world economic structure demands that the U.S. strategy must switch to the Asia-Pacific region, because Asia has become the engine of the world economy. The future of the U.S. economy relies on the growth of emerging economies in the region. U.S. investors hope to gain profits from the growth of the Asian economy to offset domestic deficits and recover the financial sector, thereby reversing the current situation. The strategy indicates that the United States will need to strengthen relations with East Asian countries, and particularly seek political and economic cooperation with China in the long run.

Therefore, the United States is shifting its focus to the Asia-Pacific region not merely for security purposes, but mainly for the need of sustaining economic hegemony. The U.S.-backed Trans-Pacific Partnership Free Trade Agreement, which President Barack Obama went out of his way to advocate at the APEC Summit in November 2011, aims to enable the United States to take a bigger slice of the pie in growing Asia-Pacific markets. To some extent, the Pentagon's ambitious military projects in Asia are designed to boost the military's influence. But after all, the military is mainly a means to serve U.S. economic interests. 

The author is a research fellow with the China Institutes of Contemporary International Relations

Email us at: yanwei@bjreview.com