The United States and China could be facing a monetary policy standoff as the two largest economies compete for the world's top spot, John Rutledge, chairman of Rutledge Capital, a private equity investment firm, told CNBC on Monday.
"China being big and rich is a problem for the U.S., because the U.S. is not growing," he said.
"The U.S. needs to get off our own duff and grow too, so we can maintain our position in the world."
And as world leaders vie for access to China's 1.3 billion-person consumer market, the United States' position in the world economy has been further compromised, said Rutledge, one of the principal architects of the Reagan economic plan in that president's first term, and a tax policy adviser to the George W. Bush White House.
Rutledge, who holds a Ph.D in economics, advises a local Beijing government on finances and has also taught at several Chinese universities.
"[China's] tribe is growing 10 percent a year and will grow for a long time, and ours is not growing at all, and at some point, they get to be a lot bigger," he said. "When I sit in meetings with leaders around the world in China, they bend over backwards."
"China has made a free-trade agreement with Taiwan, for goodness sake," he added.
As China battles inflation of some 6 percent in the next year, its government may work harder to tighten liquidity, Rutledge went on to say.
"In Chinese history, high inflation means change of government," he said. "Stability is the only word Chinese officials care about when they make policy."
Economic relations between the United States and China have cooled off amid heightened accusations of currency manipulation and internet security breaches in recent weeks. In what some say is a retaliatory response to the Fed's $600 billion bond purchasing plan, the People's Bank of China raised the lenders' reserve requirement ratio by a 0.50 percentage point Friday, making it the fifth such hike this year and the second this month.
But according to James McGregor, of APCD Worldwide, the Chinese are "very domestically focused."
"In China, they only care about China," he said.
The Chinese worry that the Fed's $600 billion bond purchasing plan will increase the speculative inflows into China and push up property prices, McGregor said.
Food prices are already up 30-40 percent in the last few months, he added, and an overheated property market is also reason for caution.
"The government is caught in a vise of real estate," he said. "High prices are good for people that have assets, but the average citizen can't get into the property market, so they're stuck between the two of them—so both sides will give them blame."