Geithner knocks out the war drums

Speaking at Peking University June 1, U.S. Treasury Secretary Timothy Geithner said the United States and China need to make major policy shifts to help the global economy emerge from the current crisis and embark on a sustainable growth trajectory.　　In the United States, he says, the savings rate will have to rise, while US consumer purchases are unlikely to be the main drivers of growth in the past; for China, this means expanding domestic demand and reducing reliance on U.S. exports.　　In the view of Morgan Stanley Asia Chairman Roach, the likelihood of this ingenious synchronised rebalancing between the two economies is very low, and the symbiotic state of your spending my ride with China is likely to be replaced by a tense situation.　　Thankfully, it's not too late to ease the tension, as Mr Geithner said at the end of his speech ——— I look forward to working with you and in the spirit of mutual respect.　　If China and the United States fall into discord, will lose each other yesterday 10:55 A.M., Peking University National Development Research Institute Economic Center Professor Zhou gave a brief introduction, U.S. Treasury Secretary Timothy Geithner began his speech at Peking University.　　In his speech, Mr. Geithner said that while continuing to deal with the current financial and economic crisis, it was important to lay the groundwork for a sustained growth and a more balanced future global economy as soon as the recovery was established (Figure 1).　　Mr Geithner said the common challenge was to recognise that a more balanced and sustainable global recovery would require changes in the economic growth of the two economies of the US and China. Mr Geithner said the savings rate would have to rise in the US (Figure 2), while US consumer purchases could no longer be a major driver of growth, as China's leaders had realised, and sustainable growth would require a very significant external demand to domestic demand,　　The shift from investment and export-intensive growth to consumption-oriented growth (Figure 3, 4).　　Both the US and China need to make major policy shifts, and Roach, chairman of Morgan Stanley Asia, needs to work together to find common solutions. Mr Roach says U.S. consumers have been the main players in the global economy (Figure 5), while Chinese producers have always been the backbone of the supply side. Few people disagree about the benefits. In the 4.5 period before the middle of 2007, the average world G D p growth rate was close to Gros ——— It was the most powerful and longest-growing boom since the early 1970s. But now the two engines are starting to slow, in the worst crisis since the 1930s, and the world economy is in a bad spot.　　This poses a huge challenge to either party or even to bilateral relations. So we need to find a common solution. If the two countries fall into discord, they will lose ——— and have serious consequences for the crisis-ravaged world economy. The stakes are huge.　　There is no room for mistakes. Roach: The likelihood of a synchronised rebalancing is very low as long as the US economy, which is short of savings, continues to maintain a huge current account deficit to prop up excess personal consumption, it needs aCreditor countries such as China provide foreign capital to them. At the same time, as long as the savings-glut Chinese economy needs to maintain social stability through export-led employment growth, it needs the world's largest consumer to absorb its output.　　But what happens if these conditions change?　　Roach argues that the US-China symbiosis is nothing more than a temporary relationship ——— it reflects a combination of interests, but it can only last for a relatively short period of time.　　True, if the US starts to increase savings – a very large possibility for consumers in the post-bubble period of excess consumption ——— the need to borrow a savings surplus from China will disappear. Conversely, if China starts spending more ——— the likelihood is also very large given its over-reliance on exports and investment ——— then the extra savings it lends to the US will be reduced.　　If these two adjustments happen precisely at the same time, an uninterrupted symbiosis can occur. The chances of such a clever synchronised rebalancing between the two economies are very, very low, Roach argues. This suggests that the likelihood of a symbiotic state being replaced by an unbalanced state is growing ——— a new reason for the tensions between the US and China, which is that as the economy slumps, the US unemployment rate is rising, and the politics that spark trade frictions are likely to get more support. For example, between 2005 and 2007, a full 45 anti-China trade laws were submitted to the United States Congress.　　Although none had been approved at the time, there were now variables. U.S. Embassy Minister Trade Counsellor Ankebin to reporters, after all, China-US trade deficit is very large, 2008 is 666.3 billion U.S. dollars, is the largest trade deficit, will be eye-catching. But a country's trade deficit is caused by a number of factors, including macro-economic savings rates and interest rates, and other countries ' protective measures and trade policies are part of the problem.　　Therefore, it is rational to look at the problem more comprehensively, which requires the leadership of two countries to deal with this problem rationally. Ankebin says Obama's trade and economic policies are still under development. Mr Obama's trade policy is a bit different from the past, consistent with a policy of free trade, which is different from the way the Obama administration came to power, to re-establish a consensus on trade across the United States, as the economic picture shows that the consensus has been considerably undermined,　　For instance, many Free-trade agreements have failed in Congress. The need for rebalancing in China has never been so urgent. "The long years of consumption downturn in the United States is tantamount to a global consumption shock that will weigh on any export-oriented economy over time." "China's policymakers must not be too optimistic to expect the external demand model to work again," Roach said. So the need for rebalancing in China has never been so urgent. China must shift its export-dependent growth model to a growth model driven by domestic demand, which is increasinglyUrgent。 China's aggressive fiscal stimulus, which is based on a 4 trillion trillion yuan infrastructure, will be temporarily effective, Roach said. Such measures refer to the the late 1990s Asian financial crisis and the counter-cyclical approach adopted by China during the mild global recession from 2000 to 2001.　　But as American consumers begin a multi-year spending squeeze, these actions are not enough to compensate for the structural flaws in China's reliance on an external demand growth model. In fact, China has long seen these problems. Two years ago, Premier Wen Jiabao warned of deep concern about China's economy as "unstable, unbalanced, uncoordinated and unsustainable".　　The "Eleven-Five plan", issued in 2006, also raises these questions, stressing that the Chinese economy must begin a major structural shift from an export-led economy to a consumption-driven growth. In the "2008 China Regional Financial Operation Report" recently released by the central bank, some survey data on the real ecology of migrant workers in Dongguan are of realistic value and significance. Survey shows that the Dongguan minimum wage from 1994 to 350 yuan/month to 2008 of 770 yuan/month, 15 years of annual growth of less than 5%, monthly income of 1000 yuan below accounted for 21%, but in consumer spending, there are nearly 60% migrant workers monthly consumption in more than 500 yuan.　　If the above survey data and China's long-term economic problems of consumption, and even with the transformation of China's economic model to put together to read, I believe that will be the start of the income distribution reform how to establish the normal wage growth mechanism for migrant workers to enlighten. In this respect, Galaxy Securities analyst Shang said that for a long time, talk about "Made in China" comparative advantage, "labor cheap" is often "beautified."　　To put aside the right and wrong of the minimum wage, the data from the central bank's survey tell us that the "China model", which relies on cheap labor costs, has created an economic miracle, but this model is clearly based on a malformed distribution of "profit squeeze Wages", which leads to low purchasing power due to lower incomes, resulting in sluggish consumption. In the case of strong external demand, the disadvantage of this distribution is not too dominant, however, when the external need for a substantial decline, through the "squeeze the income to create competitive advantage" model will inevitably lead to the so-called "overcapacity" ——— domestic residents in the absence of normal labor remuneration growth, it is not likely to produce economic growth is related to the consumption capacity. Therefore, labor cheap is not so much a "made in China" core competitiveness, rather is the biggest weakness of China's economy. Newspaper reporter Rongjinguang Intern paragraph good strategy