What about the exports? After all, the argument assumes that Chinese exporters today are as powerful as US multinationals were in the pre-Depression era.

In the 1920s, the US great exporters – General Motors, General Electric, Procter & Gamble, DuPont – were vertically integrated giants, which developed, manufactured and distributed their products. They dominated the value-added and thus most profits.

In China today, some 60 percent of exports accrue to foreign-invested enterprises. The percentage rises with the technology level. Through localization, these multinationals have been a great source of knowledge spillovers, technology transfer and employment in China. Nonetheless, most of the value-added and thus most profits accrue to these multinationals – not to China.

There are also substantial differences between the pre-Depression United States and China in this century in terms of the role of exports in the national economy. In 1929, exports accounted for about 5 to 6 percent of the US GDP. In China, exports accounted for 38 percent of the GDP in 2007.

In other words, Chinese prosperity is only a fraction of the prosperity levels of its greatest export markets. Further, foreign multinationals dominate Chinese exports, value-added and profits in China.

In 1929, the US could have changed the course of history through massive fiscal expansion to replace declining global demand. Today, China, even if it were willing to, cannot and should not be expected to play a comparable role – not yet.

Over time, China's prosperity levels will grow, in accordance with increasing productivity. However, China today is not the US in 1929. The time is different. The place is different. And the world is far more globally interdependent.

In the past, some observers claimed that China had "decoupled" from the US-led world economy. Measured in terms of exports and imports of GDP, the degree of openness of the US and Chinese economies in 2007 were 22 percent and 65 percent, respectively. China is almost three times more open. In such conditions, the "decouplement" theory is naive.

Today, plunging domestic demand in the US and China has left manufacturers in both countries plagued with overcapacity. As Chinese Premier Wen Jiabao has put it, maintaining "steady and fast growth" is the "biggest contribution" China can make to help the world overcome the current financial crisis.

In the postwar era, the US was the most outspoken advocate of international multilateral institutions and free trade. During the past eight years, the US has opted for unilateralism in security and become increasingly skeptical about free trade.

Before Christmas, in one of her last acts as US Trade Representative, Susan C. Schwab filed a sweeping petition with the World Trade Organization alleging that China illegally aids local exporters of Chinese-branded products, from appliances to apparel, with such subsidies as cash grants and cheap loans.

In the long run, such trade unilateralism could prove devastating to China, the world economy and particularly the United States.

Soon the incoming US president Barack Obama must cope with the estimated $1.2 trillion federal budget deficit. The new White House must also demonstrate global leadership to reignite growth in the world economy. That leadership is impossible without multilateral cooperation.

Today, the US' recovery, China's steady growth and the stable international environment are intertwined. The US prosperity is no longer possible without China's economic development.

The author, Dan Steinbock, is research director of International Business at the India, China and America Institute, an independent US think tank.

(China Daily January 14, 2009)