Though the US Federal Reserve’s first interest-rate hike of 2023 is smaller than those that preceded it, policymakers have signaled that more increases are on the way, despite slowing price growth. But there is good reason to doubt the utility – and fear the consequences – of continued rate hikes, on both sides of the Atlantic.
A contest for China’s soul is now underway in that giant country, pitting two powerful forces and two very different stances toward the outside world against each other. The outcome will have a major impact on whether China succeeds in becoming a nation capable of having truly constructive and durable relations with the outside world.
On one hand, China’s economic revolution has helped position it in the world as a confident powerhouse of trade, a more responsible global powerbroker, and even as a reassuring military presence. On the other hand, China remains trapped by a past and a mindset steeped in a sense of victimization, which tempts it to export blame for internal problems.
The main question is whether China can escape the pull of this old psychological syndrome – which kept it preoccupied throughout the twentieth century with debilitating sentiments of weakness, insecurity, and humiliation – and allow itself to be guided by a new outlook on the world, and even on old enemies.
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