Recently, the possibility of the US economy heading towards a "fiscal cliff" has added a new variable to the already unstable global economy. Under a highly sensitive transmission mechanism in the financial sector, the performance of US stocks and international gold prices seem to amplifying the fears. Wayne Swan, the Australian treasurer, warned that the US needs to break the political deadlock in order to avert the so-called fiscal cliff that is[Hong Kong company registration] jeopardizing a "fragile" recovery in the global economy.

However, at a time when moral hazards continue to flourish among nations, we particularly need to see through the carefully coined jargons of "debt ceiling" and "fiscal cliff." In July and August last year, the White House and Congress together acted a tacit play over the raising of the debt ceiling.

However, if there was the potential of a real collapse of the dollar system, the proposition of a US bankruptcy would be unthinkable. To speak bluntly, the term fiscal cliff coined by US Federal Reserve Chairman Ben Bernanke is a trick used to assert dominance over the rest of the world. It is grating on the sensitive nerves of the emerging economies.

On the one hand, despite that the overall US economy is burdened by the financial crisis and substantial losses in the financial sector, the economic growth index of the US in the fourth quarter last year reached 3 percent. The Dow Jones Industrial Average broke 13,000 in March this year, hitting a new high since May 2008. This evidence points to the fact that the US financial system is gradually recovering, which is of decisive significance for the recovery of the real economy. Moreover, in the face of ever-fiercer competition from Apple, Goldman Sachs, GE, and a large number of other lucrative US international companies, companies in Japan or the EU have to struggle to survive.

On the other hand, the US is tuning its priorities of economic development. Nowadays, pioneering breakthroughs in technology have led to a "third industrial revolution" [Set Up Company Hong Kong] represented by data, smart manufacturing and wireless networks. This has become the driving force for the next round of global economic growth. The US plays a leading role in R&D and financial services. It also has abundant experience in the industrialization of new technologies. These advantages will help the US occupy a commanding position during this "super industrial" revolution, thus reshaping the global map of the division of labor and wealth.

Moreover, even if the US national debt reaches tens of trillions of dollars, the status quo will not change as long as the US dollar continues to dominate the international currency system, because the US can dilute the interest it needs to pay by devaluating the dollar. In recent years, the US has imported abundant cheap goods with its dollars, which has contributed to the America's soaring trade deficits. Meanwhile, its well-developed domestic financial markets absorb the funds needed to finance its economy. As the only bond market that can accommodate up to $10 trillion of foreign exchange reserves, the US government bond market is the only choice for many investors and foreign governments.

The country which controls the international currency system will also control the world. At certain times in past years, the US has had the impulse to default on its debt, even though it has abstained from doing so, due to its position as the world leader in financial services and stabilizer of the global financial system. But the US is well aware that its power can expire. It has long benefited from the leading role of the US dollar, and has again[Hong Kong Company Formation] and again imposed its domestic bad debts on other nations of the world. There is no question that the US will continue to try to maintain these vested interests �D this is a major problem that China should be concerned about.