US monetary gamble
Updated: 2013-11-01 07:16
The grandiose suggestions that the United States offered to both China and Germany on their economic rebalancing are, at best, well-meaning; but once again it is a case of it saying "let me take the speck out of your eye", when all the time there is a plank in its own.
Less than two weeks after ending its partial government shutdown and pulling itself back from the brink of a historic debt default, the US has started to lecture China and Germany on how to run their economies more responsibly.
In its twice-a-year Treasury report, Barack Obama's administration sternly urged Germany to push for more domestic-led growth, rather than relying so much on exports to fuel its economy, and said the Chinese currency is not appreciating as fast or as much as needed.
Should the two named countries take these comments seriously?
If there is something common behind the economic success of China and Germany before and after the global financial crisis, it is their all-out efforts to make best use of their respective comparative advantages to keep themselves ahead in the real economy sectors.
Since the 2008 financial crisis has fundamentally reshaped the world's economic landscape, there is no question that the two countries should adapt their growth models to the new reality as soon as possible.
In this sense, the US carping that the two need to do more to rebalance growth seems reasonable. What is unreasonable, is while doing so it has turned a blind eye to the urgent need for it to do its own painful economic rebalancing.
However, the US is also being insincere when it calls for faster appreciation of the renminbi, as a stronger and more internationalized Chinese currency would narrow the country's trade surplus and make it less appealing to purchase US Treasury bonds at the current low level of yield.
Since the Fed is still printing money through bond purchases at the rate of about a trillion dollars a year, the US government would do better to focus on cleaning up its own fiscal mess instead of lecturing others. No one is really expecting an abruptly de-Americanized world. But a failed US monetary gamble will only do more harm to the fragile global economy.
(China Daily 11/01/2013 page8)