In 2020, Sebastian Mallaby of the Council on Foreign Relations announced the beginning of the “age of magic money,” in which advanced economies would “redefine the outer limits of their monetary and fiscal power.” By July 2022, Mallaby was predicting that this age was coming to an end. But, while most major central banks are now reversing quantitative easing (QE) and raising interest rates, China may need to head in the opposite direction.

We are living in a very different world. Shifting macroeconomic trends including diversification and second sourcing because of de-globalization and de-coupling have significant implications for the global economy. The strategic competition between the United States and China and other major geopolitical developments will fundamentally shape the world we live in.

Modernization is the only way forward for China, which is offering enormous opportunities, not threats, to the world. There is every reason to seek areas of mutual benefit with the United States and the road map to the future, if followed, will be good for China and good for America.

After the 20th Party Congress, relations with the U.S., Europe and Japan are likely to improve, as China continues to pursue high-quality development and the integration of domestic demand with supply-side structural reforms.

Last January, China’s government forecast that the country’s economy – which, at the time, was experiencing a strong rebound after the initial pandemic slowdown – would grow by 5.5% in 2022. But by the second quarter, unfortunately, the rapid spread of the Omicron variant of COVID-19 had forced the government to implement emergency containment measures in its most economically dynamic cities, including Beijing, Guangzhou, Shanghai, and Shenzhen.

China’s economic troubles in 2022, exacerbated by zero-COVID regulations and stiff barriers for travel and exports, have caused consumer demand to hit a new low. The digital yuan, the first centrally backed crypto token, could be the solution Beijing needs to restore consumer trust in their economy.

The last two years of COVID-regulated trade with China have drastically changed China’s economic and social capital on the world stage. China must be proactive in inviting foreign business back in or risk their former partners losing interest.

In its pursuit for unipolar primacy, the Biden administration is risking the economic stability of China, the West, emerging Asia, and the futures of the Global South.

As an emerging power, China must cultivate a healthy national psyche, seeing not only from its own perspective but also that of others. It should do its own things well, balancing reform, development and stability. And it should work to reestablish positive relations with the U.S..

China’s fundamentals are resilient and robust, and the trend points to normalcy and growth. Trade is up, inflation has been controlled, and while the U.S. Fed’s rate hike pushed many currencies down, the Chinese yuan has remained stable.