In response to an FT article by Ed Luce on 22nd March 2015, entitled 'US gridlock's rising global price tag'
Very good choice of subject, thanks Mr Luce.
I agree with much of what you say, but differ on how far the shift in global power, and loss of US influence has already progressed. For example:
"If the US cannot accommodate a rising China in the bodies it leads, China will create its own"
I think that boat has already sailed and is not coming back to port whatever President Obama does. China has been setting up alternative systems and institutions for over a decade. The US has had the advantage of printing the world's reserve currency in whatever quantities it chooses for 40 years, and China now holds over $1.25 trillion of their debt, which represents over 20% of US overseas debt. No-one except a fool would fail to hedge a growing position like that, and no-one but a fool would not increase that hedge over time, especially when it became obvious that the goal of the US is to control the rules of the game with one hand, and print as much as it likes with the other. The Chinese are not fools.
Of course, it's not that simple - geopolitically, there is also: the US' reinvigourated presence in China's sea routes, its support for Japan in their regional disputes with China, and the US' deteriorating relationship with Russia, which has the energy to complement China's manufacturing. All of these bode for increasing tension between the two powers.
The Chinese are too far down their self-determined path to be hauled back - however much Mr Obama, his successor or the Congress throw their toys out of the cot.