The west has historically viewed Asia from its own peculiar prism. Over 150 years ago, Karl Marx said the western bourgeoisie will throw cheap mass produced goods at the barbarians â Asians of course â and convert them after their own image. Today the âbarbariansâ are throwing ever larger volumes of cheap mass produced goods at the original bourgeoisie! Marx never came to India, so could not be faulted for somewhat misreading the nature of the economically stagnant, agriculture-dominated Asia in the nineteenth century. Much has changed since then. However, even today the west appears to betray a lack of understanding of Asian societies, in spite of the rapidly globalising world where information flows are seamless. The editor of Newsweek recently suggested in an article that the election campaign in the United States revealed how little the Americans know and understand about Asia. There is an underlying stereotype view, which most Americans share, that Asian societies need to urgently reform their political, institutional systems. Little does America realise how much Asia is indulging Uncle Samâs ever-increasing consumption needs. This lack of understanding and empathy is what results in ill-timed statements, such as the one by President George Bush, about India and China being responsible for rising world food prices. Many scholars feel America is in a state of denial and refuses to acknowledge that the economic power centre may be shifting towards Asia faster than can be imagined. Last year the US treasury department came up with startling facts following a survey of foreign ownership of American financial assets. As of June 2007, for the first time, total Asian investments in US long-term government securities exceeded that of Europe as a whole. Asiaâs investment in US long-term government securities is $2,383 billion as against Europeâs $2,333 billion. This has far reaching significance because the US economy historically has had a deep engagement with Europe, particularly after the war. It is therefore significant that Asia now holds more long-term US paper than Europe. Also, the total foreign holding in US financial assets, mainly equity and government paper, is likely to touch $12 trillion by June 2008. Soon this figure will exceed the US GDP itself. This is being driven largely by Asian countries who are generating massive current account surpluses each year by exporting to the west. The total foreign holding of US financial assets is growing at about 20% overall. However, the outstanding investment by China and West Asia in US securities is growing at over 40%. Chinaâs holding in US equities and government debt touched $922 billion in June 2007. And this is poised to cross Japanâs $1,196 billion this year. China will thus become the largest foreign investor in US securities. So the average American needs to be told that his country is deeply indebted â no pun intended â to China when US foreign policymakers run a tirade against the Chinese from public platforms. You donât borrow so heavily from people you dislike, right. Also, you try to understand and be nice to people from whom you borrow so much! This is the dilemma that the US faces today. At the policy level, it must put in place a new framework that tries to internalise and respond to the new, emerging economic order. Instead of rational analyses, what one has witnessed in the US election campaign so far is a lot of protectionist rhetoric that seeks to blame the outside world for all the ills visiting the American economy. Former US treasury secretary Lawrence Summers has rightly observed that the American political class cannot solve the deeper malaise afflicting the US economy by becoming protectionist. The election campaign has so far shown a marked sentiment against free trade policies pursued by the US in recent years. There has also been increasing emotional outburst against American jobs getting outsourced to other developing countries. Some experts have expressed fears that America may end up pursuing its own version of economic nationalism in the near future. If the US begins to withdraw practising what it has preached these past fifty years, a whole new chain of political and economic events could get triggered. The US will face its real test in the months to come. If the US economy goes into a longish period of slump, and the dollar begins to lose its sheen as a reserve currency, the political class may be tempted to go into a xenophobic mode and start pursuing protectionist policies. That will be bad for both the US and the rest of the world. The need of the hour is clearly for the US to first understand the changing dynamics of the world economic order and then pursue a win-win engagement with all its trading partners. There is an urgent need to think of new ways of breaking the logjam at WTO, which is by far the most democratic forum that exists today. Asian economies also need to change their mindset and start actively assuming the new responsibility of driving world growth, as opposed to their normally defensive behaviour at various multilateral platforms.