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The key issue is US policies restricting trade with China (2)

16:01, June 23, 2010

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President Hu Jintao and President Obama subsequently discussed the valuation of China's currency on the sidelines of the Nuclear Summit in Washington. At the recent annual Strategic and Economic Dialogue U.S. Treasury Secretary Timothy Geithner said that it is "China's choice" whether or not it revalues the RMB. American policymakers are wisely beginning to interact with Chinese policymakers, at least in the executive branch of the US government, with respect instead of insulting them with criticism, as has been the case in past. Treasury Secretary Geithner stated at that time, "I am confident that China will decide it's in their interest to resume the move to a more flexible exchange rate that they began some years ago and suspended in the midst of the crisis." President Obama's press secretary then stated, "The administration will continue to press the Chinese to ... value their currency in a way that is much more market-based. That is the way we think is best at this point, and I think you've seen reports of the past week or so about the Chinese beginning to take some steps and realize on their own that this is the best path for them." Japan acceded to American demands that it revalue its currency with devastating effects it is still struggling to recover from. In the case of American demands that China promptly increase the RMB's exchange rate, China, America and all other nations would be harmed.

China-US relations began a new era on September 16, 2008, when Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson abruptly informed world that the United States financial system would collapse unless the government stepped in to save insolvent America-based global banks, insurance companies and automakers. The emergency approval of the US$ 862 billion bailout revolutionized the American government's commitment to a market economy, by turning the American government into the largest shareholder subsidizing the commercial failure of formerly non-state-owned leading global American companies. The failed laissez-faire economic theory, which American policymakers still demand China adopt, has failed in the real world and been replaced by a new era of massive American government control of market forces.

In preparation for the G20 meetings on June 26-27 China has announced that it will resume its incremental currency reform. This will enable the real causes of trade imbalances between the US and China to be discussed, such as US restrictions dating from the 20th century's Cold War era to be lifted, so that China can purchase the high technology products it imports from Europe to also be purchased from the US. China's political system enables its economy to be more "scientifically managed." The global financial crisis, and resulting economic, unemployment, government solvency and social problems in many nations have highlighted the stability and sustainable design and growth of China's economy, which is driver of global economic growth. It has grown at 8.7 and 8.2 percent in 2008 and 2009 and to date at over 11 percent this year in spite of the global financial and economic crisis.

The now almost 2 year old and growing financial and economic crises in the US, European Union and other nations has revealed that in today's globalized economy, as in nature, diversity and adaptability is the key to survival and evolution. If China's political and economic model was the same as the US's both the largest and second largest economies on which the other 192 nations' economies depend for economic growth would be malfunctioning simultaneously.

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The articles in this column represent the author's views only. They do not represent opinions of People's Daily or People's Daily Online.

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John Milligan-Whyte and Dai Min are the executive producers and co-hosts of the Collaboration of Civilizations television series adapted by the eight books they wrote in the America-China Partnership Book Series published in English and Mandarin in 2009-2010. They founded the America-China Partnership Foundation and Forum in 2008 and the Center for America-China Partnership in 2005. E-mail: [email protected]