Politicizing the China-US trade relationship will not fix the
bilateral imbalance between the two countries, a US economist
said.
Instead of pointing the finger at China, a savings-short US
should have a close look in the mirror, urged Stephen Roach, chief
economist of Morgan Stanley.
"The United States can do a much better job in boosting its
savings rates," Roach told China Daily during an interview
on the sidelines of China Development Forum, which closed
yesterday.
The two-day high-level forum was organized by the China
Development Research Center of the State Council to discuss China's
transition towards new economic growth models.
"China knows it has a lot of imbalances to deal with. It is
trying to put policies in place to deal with its imbalances on its
own terms," Roach, a long-term observer of the Chinese economy,
said.
China has registered double-digit growth for four years while
corporate profitability kept improving and inflation remained
modest.
However, a ballooning trade surplus, especially the bilateral
one over the US, has made China an easy target for blame by some US
politicians in recent years.
Thanks to its comparative advantage as a low-cost manufacturing
power, China's trade surplus surged to a record US$178 billion last
year, up 74 percent from the previous record of US$102 billion in
2005.
Meanwhile, the US suffered from the mother of all trade deficits
- an external imbalance that hit about 7 percent of its gross
domestic product in 2006 - largely due to excess consumption.
In face of increasing external imbalances, China is trying hard
to reduce its reliance on exports and boost domestic consumption.
And to achieve energy-saving, environmentally friendly sustainable
development, the country even lowered its growth target this
year.
Rather than facing up to its own imbalances as a result of an
unprecedented saving shortfall, "the US approach has been to blame
China for imbalances by maintaining undervalued currency", Roach
said.
"Structural adjustments are hard to accomplish for any economy.
But that does not mean it should not be done because the longer the
global economy continues to become more imbalanced, the greater the
chance we would have some type of crisis."
(China Daily March 20, 2007)