America has managed to hold off all challengers so far, I recall Japan supposedly taking over from the US in the 80s. America's great advantage is its ability to turn an R&D dollar into revenue. China so far is copying American designs and innovation. In reality China is nothing more to the US than Indiana was. China is the factories of America. Unlike Indiana, China has a military, this is where the tension is. Unless China ditches it's unitary state and party controlled system, it will not be able to compete with the US over the long term. American business is too dynamic for a unitary state to challenge it - or even come close.

Cameron,
you write:

"America has managed to hold off all challengers so far"

I'm not saying that China will become top dog and replace the US as a hegemon or imperial power. I'm saying that the unipolar understanding of the world of nations is misplaced, because China is a regional power in a military and economic sense.We are talking about the limits of empire and the emergence of a multipolar system.

You write:

"In reality China is nothing more to the US than Indiana was."

China props up the debt ladened US economy by spending its surplus by US Treasury Bills and keeping its reserves in US dollars. There is a lot of tension there.The US's annual trade deficit is around $730bn pushing---6.0% of GDP---with US exports stagnant and imports continuing to soar.

Total exports would have to grow at a nearly 16% pace just to keep the trade deficit stable. I cannot see that happening. Hence a declining US dollar. A falling currency is what happens to the currencies of countries with large trade deficits.

You seem to agree with Alan Greenspan, the Chairman of the Federal Reserve, who has stood by even though the US current account deficit has reached record levels. He has argued that financial globalization has reduced the risks associated with a more leveraged US external position, and neither large US trade deficits nor a rising debt to GDP ratio is a particular concern so long as the US economy stays nimble.

I would argue that no country's debt can increase indefinitely, even if many of your creditors are seemingly generous foreign central banks.

Gary, I would agree with this;

I would argue that no country's debt can increase indefinitely, even if many of your creditors are seemingly generous foreign central banks.

except that the Asian style of capitalism is so export driven with the state supporting it. America is their big customer, until the Asian economies turn into US/Au/UK style consumer economies I dont see it happening. I also believe the Indonesia will soon do a China too. The interest with Indonesia is if it will adopt (maintain) the Asian style of capitalism or become a western-style consumer based economy.

Cameron,
I do think that we ned to think in terms of a diversity of capitalisms, and not in terms of one -the free market Anglo-American one---being the ideal type to which all must aspire.

The latter view merely expresses the Washington consenus--global neo-liberalism. It is representation of an economy marked by ever greater inequality becoming institutionalized.

In the US neither the political establishment, nor the electorate, is any longer willing to spread around the benefits of freer trade to help those in the US hurt by globalization.

This is quite different from the aftermath of the Great Depression after World War II,where the benfits of globalization were spread through a progressive tax structure, government social spending, and transfer payments.

Instead of either Asian or American capitalism we need to think in terms of a Brussels, Beijing and Washington nexus: they will have to meet to better coordinate their efforts to manage globalization in the form of a process of constructive and inclusive triangulation.

Re your comment

"the Asian style of capitalism is so export driven with the state supporting it and America being their big customer"

Is not this kind of capitalism shaped by the power relationships of the global economy? After all, China is entering into a world system designed by the West for its own benefit.

If we go back 150 years to when the British promoted free trade when its economy was the strongest in the world. we find that Friedrich List, in his National System of Political Economy (1841), arguing that political economy as espoused in England, far from being a valid science universally, was merely British national opinion, suited only to English historical conditions.

List's institutional school of economics asserts that the doctrine of free trade was devised to keep England rich and powerful at the expense of its trading partners; and that it must be fought with protective tariffs and other protective devises of economic nationalism by the weaker countries.

Today, it is the US that promote free trade because unbalanced trade has worked in favor of the stronger US economy. So China is forced to adopt a state national system of political economy.