Finger pointing no solution

13:45, May 30, 2011      

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The urgent need to rebalance the Sino-US economic relationship, as Commerce Secretary Gary Locke told a number of US senators on Thursday, is more than obvious.

Yet, his pronounced ardor to press for more access to the Chinese market and faster revaluation of the yuan as the elixir for all the US' economic ills is misdirected.

Given the current US political climate, sounding tough on China may help him become the first Chinese-American to serve as the US ambassador to China, but when it comes to improving the commercial relationship between the world's two largest economies, finger pointing simply does not work.

The semiannual report on international economic and exchange rate policies that the US Treasury Department released on Friday confirmed that China is not manipulating its currency. Such a matter-of-fact conclusion is badly needed. But this alone will not wake up those in Washington who have mistaken the exchange rate of the Chinese currency as the key to boosting US exports and thus reducing its trade deficit and unemployment.

As a top US commercial official, Locke is certainly well positioned to recognize that the economic ties between the two countries can no longer be characterized by China making and the United States taking.

Nevertheless, if the would-be US ambassador to China wants to play a productive role in both governments' efforts to rebalance their economies for sustainable growth, he should stop, as early as possible, playing up to the politicized thinking that habitually blames others for the US' economic woes.

The challenges of rebalancing are real and imminent for both China and the United States.

As the world's fastest-growing developing economy, China is keenly aware of the increasing need to rebalance its economy away from investment and exports for growth. Therefore, Chinese policymakers have attached unprecedented importance to the task of boosting domestic consumption, though progress in this regard remains significantly inadequate largely due to the country's huge income gap.

Being the world's largest economy, the US is undergoing a jobless recovery that isn't robust enough to avoid a huge hole in its public finances. Though it looks certain that the country sooner or later will have to rebalance itself away from its reliance on consumption, housing and debt to exports, investment and saving, US politicians are unfortunately still divided on devising a credible roadmap to restore fiscal sustainability as well as job-creating economic growth.

The coincidence of macroeconomic rebalancing in China and the United States does not necessarily point to a cause-and-effect relation that makes one the prerequisite for the other.

But it will be enormously promising for the two countries, as well as the world, if both sides can focus on expediting painful but necessary domestic reforms.

Source: China Daily
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