Since April this year, the United States has continuously increased pressure on a revaluation of the Renminbi (RMB).

On April 17, the US Treasury Department submitted a report to the Congress, demanding that the Chinese government reform its monetary system "without delay" in the coming six months, and threatening China with trade sanction. The report went so far as to charge that China's exchange rate policy hinders the adjustment to the unbalanced international market. On May 27, US Treasury Secretary John Snow resentfully indicated that he felt disappointed at China's delay in revaluating the RMB. He warned: a minor, symbolic appreciation of the RMB is not enough.

What is noticeable is that the wording of the report is "carefully chosen", laying particular emphasis on "global balance". Then, isn't it that China has really led to a global imbalance and so has to shoulder the responsibility for revaluation?

As a matter of fact, it is precisely the US economic policy that has caused a global imbalance. Famous US economist Prof. Jeffrey Sachs, in his recent article, "Bush Lost the Bet", sharply criticized that the foundation of the Bush administration's economic policy is the most adventurous stake, especially its tax-cut measure is irresponsible from the very beginning. He believes that the failure of this policy has added unstable factors to the world economy. In fact, it is this dubious tax-cut policy that has given the "green light" to lifting financial budgetary deficits.

Particularly after the "9.11" incident in 2001, the US government enormously increased expenditures on domestic security, on the Afghanistan war and the Iraq war. Currently. US annual budgeted deficit has accounted for 5 percent of GDP (gross domestic product), a greater part of which is made up by the loans borrowed from the central banks of Asian countries. Harvard University Prof. Rogoff pointed out sharply that the present so-called "global unbalance" actually is "US incontinent loans".

Drastic tax-cut and sharp increase in military spending have led to astonishing growth in US imports, this is the important reason for the tremendous US trade deficits. However, senior US officials consistently use the "outward" mode of thinking to seek solutions, accusing China and other countries of adopting "illegitimate trading means" or "manipulating domestic currency", and lifting this to the height of threatening balanced global growth. Just as Sachs put it, this means "asking others to shoulder the responsibility for its own difficulties".

A revaluation of the RMB cannot really spur the United States to replace import with domestic production. Particularly in the era of economic globalization, many products are born of the supply chain that covers many countries and regions. Therefore, the floating currencies of some individual countries are totally insufficient to change the status quo of US domestic suppliers. If a hasty substantial revaluation is forced on the RMB and thereby leading to a slowdown in China's economic development, then how can China's ability to import from the United States be enhanced? Moreover, if the United States obstinately relies on the devaluation of the US dollar to reduce its trade deficit, it will possibly cause a dumping momentum of the US dollar on the international market, thereby leading to a steep fall of the US dollar, the outbreak of a global financial crisis and then the emergence of a worldwide economic recession--the consequence as worried about by economist Garten at Yale University.

If the United States really wishes to maintain a global balance, it might as well do more to adjust and correct itself instead of imposing pressure on China in the name of maintaining global balance.

By People's daily Online