In this special edition of Current Accounts, the Hinrich Foundation’s podcast on global trade, the Association of Foreign Press Correspondents-USA sits down with Senior Research Fellow Stewart Paterson to unpack the US dollar’s global dominance and what we are still getting wrong.

As the linchpin of the international monetary system, the US dollar’s role extends far beyond America's borders, influencing trade flows, shaping investment decisions, and anchoring global financial stability. Beneath the surface of this dominance lies a host of unresolved tensions, from sustained trade imbalances and currency misalignments to the political and economic strains these dynamics impose on both emerging and advanced economies alike.

While the Trump administration has imposed protectionist measures, such as tariffs, to address concerns about domestic industry and employment, the prolonged weakening of the dollar since January has resulted not from these policies but from a deeper set of worries among investors across asset classes over the intense and ongoing fiscal and business uncertainty created by the administration’s policies. Though Paterson found much to dislike about the way Trump’s tariffs were derived, he notes that an inadvertent outcome may be the real effective depreciation of the US dollar. Such weakening is needed if the policy goal is to return the American economy to external balance, given the dollar’s overvaluation and persistent US deficit spending.

Tune in to this podcast as Senior Research Fellow Stewart Paterson joins the Association of Foreign Press Correspondents-USA to break down the driving factors behind the dollar’s global dominance, which follows up on Paterson’s research paper for the Hinrich Foundation, “Trump, the US dollar, and American trade policy.”

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Tune into the Hinrich Foundation’s podcast series for insights on international trade.

In this special edition of Current Accounts, the Hinrich Foundation’s podcast on global trade, the US Association of Foreign Press Correspondents sits down with Craig Allen, former President of the US-China Business Council, to assess how China is redefining innovation, what the US gets wrong about it, and why this global race is more complex and consequential than ever.

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Tune into the Hinrich Foundation’s podcast series for insights on international trade.

In this special edition of Current Accounts, the Hinrich Foundation’s podcast on global trade, the US Association of Foreign Press Correspondents sits down with Senior Research Fellow Stewart Paterson to unpack why China has struggled to rebalance its economy toward the consumption-led growth it desperately needs.

China’s economic slowdown is sending shockwaves across global markets, raising concerns about the future of the world’s second-largest economy. Once a key driver of global growth, the country now faces a range of challenges, from a sluggish property sector and mounting local government debt to declining foreign investment and weakened consumer demand. These issues, coupled with the government’s cautious approach to stimulus and ongoing geopolitical tensions, has sparked debate about whether China can regain its economic momentum. As businesses and investors worldwide watch closely, the question remains: why it is almost impossible to re-engineer China’s political economy?

Central to the issue is China’s investment-led growth model, which has driven massive infrastructure development, but it has also led to diminishing returns. The state-controlled, bank-dominated financial system has resulted in a surge of non-performing loans, highlighting inefficiencies in the country’s investment strategy. With capital accumulation now outpacing returns, China faces escalating financial risks, including the potential for a major crisis.

Furthermore, despite years of effort, China has struggled to shift toward a consumption-driven economy, where domestic demand could play a more significant role in growth. Structural barriers such as income inequality, high savings rates, and an undervalued currency make this transition difficult. The government’s reluctance to relinquish control over the economy, prioritizing trade surpluses and state-directed investments, further complicates the shift. To pivot towards a consumption-based model, China would need to implement sweeping reforms, including a more progressive tax system, improved social security, and higher wages. Without these changes, China risks prolonged stagnation and financial crises that could derail its long-term growth and geopolitical aspirations.

Tune into this podcast as Senior Research Fellow Stewart Paterson joins the Association of Foreign Press Correspondents-USA to break down the key factors behind China’s sluggish growth and what it means for global markets.

Download Transcript

Tune into the Hinrich Foundation’s podcast series for insights on international trade.