Joint Vision
The Sino-U.S. road map towards achieving consensus on the agreed lofty strategic goals within a mutually agreed time-frame is the millennium challenge. When the world’s sole superpower and biggest developing giant talk to each other to resolve the wide range of bilateral issues with global implications ─ there is hope. Especially when they agree that America needs to rein in its appetite for cheap foreign imports and avert their negative savings rate.
Their agreement that the current account surpluses of oil exporting countries ─ estimated to be many times more than China’s ─ is another major source of global imbalances was a refreshing millennium consensus.
The joint vision to engage in ongoing intelligent dialogue to resolve complex economic, military and political issues is a major constructive adjustment for America.
The alternative to the joint vision, that America demanded is self destructive and would create a global economic tsunami. Shock waves would rupture corporate America. A stronger yuan would make household-name brand companies like General Motors, Microsoft, Boeing or even Exxon-Mobil prime acquisition candidates for the acquisitive Chinese with their excess dollars.
The diplomatic significance of the high level delegation to China, is that it only went to China. Not Japan, South Korea, or any other major U.S. trading partner in Asia. There is no doubt China is the foremost strategic global partner for America that needs its undivided attention, especially after it passed Mexico in 2006 as the second largest U.S. trading partner.
The weak yen has left Japan mired in its mercantilist strategies of the past. China knows this and until the yen rises sharply, the yuan won’t either. The fact is America is living unsustainably beyond its means. Consumer spending accounts for 70 per cent of the U.S. economy. A stronger Chinese currency won’t change the unbalanced nature of U.S. growth. Remember that the Plaza Accord of 1985, which sharply weakened the dollar versus the yen, did little to improve the U.S. balance of payments. Instead, it contributed to the asset bubble that led to Japan’s lost decade of the 90s. Any wonder China is in no rush? To try and rush China into an unjustified economic crisis with the threat of protectionism is not only short sighted ─ it won’t work and is a waste of time.
Their agreement that the current account surpluses of oil exporting countries ─ estimated to be many times more than China’s ─ is another major source of global imbalances was a refreshing millennium consensus.
The joint vision to engage in ongoing intelligent dialogue to resolve complex economic, military and political issues is a major constructive adjustment for America.
The alternative to the joint vision, that America demanded is self destructive and would create a global economic tsunami. Shock waves would rupture corporate America. A stronger yuan would make household-name brand companies like General Motors, Microsoft, Boeing or even Exxon-Mobil prime acquisition candidates for the acquisitive Chinese with their excess dollars.
The diplomatic significance of the high level delegation to China, is that it only went to China. Not Japan, South Korea, or any other major U.S. trading partner in Asia. There is no doubt China is the foremost strategic global partner for America that needs its undivided attention, especially after it passed Mexico in 2006 as the second largest U.S. trading partner.
The weak yen has left Japan mired in its mercantilist strategies of the past. China knows this and until the yen rises sharply, the yuan won’t either. The fact is America is living unsustainably beyond its means. Consumer spending accounts for 70 per cent of the U.S. economy. A stronger Chinese currency won’t change the unbalanced nature of U.S. growth. Remember that the Plaza Accord of 1985, which sharply weakened the dollar versus the yen, did little to improve the U.S. balance of payments. Instead, it contributed to the asset bubble that led to Japan’s lost decade of the 90s. Any wonder China is in no rush? To try and rush China into an unjustified economic crisis with the threat of protectionism is not only short sighted ─ it won’t work and is a waste of time.
posted by Peter de Krassel's Custom Maid Politics at 9:16 PM
0 Comments:
Post a Comment
<< Home