Is Global Integration an Unavoidable Fact?
Along with the integration required in light of the above-described economic connections, China, the second most powerful economy in the world, recently stated that it intends to stall its investment policy in Europe and the United States. Wen Jiabao, Prime Minister of China, said in an address at the Annual Meeting of the New Champions 2011, “Governments should fulfill their responsibilities and put their own house in order. The major developed economies should adopt responsible and effective fiscal and monetary policies, properly handle debt issues.” [12] Additionally, the Bank of China froze foreign currency deals with several major European banks, including Société Générale, Crédit Agricole, and BNP Paribas, in light of the debt crisis in Europe and Moody's credit rating downgrades of several major banks in Europe.
Japan expressed a similar view in a statement by the Japanese Finance Minister, Jun Azumi, in a G20 finance ministers and central bankers meeting in Paris October of 2011, “Europe needs to get its act together because unless the crisis is put to an end, it will start to affect emerging economies which have enjoyed strong growth.” [13]
The attitudes of China and Japan to the debt crisis in Europe raise the questions, “Is the isolationistic tendency of China and Japan feasible in today’s global and integral world? Can protectionism and separatism of powers maintain their economic stability? Can they disconnect their relations with other nations and become self-sufficient?”
The answer to all the above is a resounding “no.” The days when a country could single-handedly provide for all its needs are gone and will not return. In the global-integral world, even the most powerful economies depend on one another and on the entire international system (perhaps more than all the others). Thus, a slowdown in the U.S. economy will induce a sharp decline in China’s and Japan’s exports and will hurt those countries’ economies.
Additionally, government bond markets have become a global arena where countries raise funds from other countries and invest their own reserves in bonds of other countries. Imagine what would happen to the Chinese economy, now one of the two greatest bondholders of U.S. government bonds, if America were unable to repay its debt or declared a debt-restructuring arrangement.