From Asia, we learned that China is close to completion of a new type of missile which could be used to take out moving American aircraft carriers patrolling the Pacific, and that Beijing is rolling out a shiny new stealth fighter.

While China rockets towards achieving parity with American military power, the US feebly limps forward. In Washington, Defense Secretary Robert Gates unveiled his proposed budget for next year, which included nearly $80 billion in cuts over the next five years and tens of billions more in cost-saving measures.

How can China afford to develop these new systems, while the US, the global hegemon, can’t even afford to maintain its current level of defense expenditures? To quote the political operative James Carville, “It’s the economy, stupid.”

China’s economy is incredibly robust; the last time US economic growth rates even briefly approached those of China today was in the 1950s. This expansion has put China on track to surpass the United States as the world’s largest economy in the next two decades.

It also explains how China can afford to rapidly build up its military and to make its huge infrastructure investments like the Beijing Bird’s Nest that was on display at the 2008 Olympics. China’s high economic growth has provided the Communist Party in Beijing with a war chest of new tax revenue that it is spending with gusto to transform the country from the equivalent of a Sony Walkman to the equivalent of an iPhone in terms of its infrastructure, military, and social services.

Which brings us back to the economy. The United States needs economic growth not just so Americans can have jobs and a high standard of living at home (which is nothing to sneeze at, to say the least), but also to remain the dominant superpower abroad.

Therefore, if America wants to remain supreme on the world stage, economic policy should always be – even in times of strong economic growth – Washington’s number one priority. Right now, more than ever.