Paulson Remarks on 4th Round of U.S.-China Strategic Economic Dialogue
With the 4th round of the SED looming, much has been made about what to really expect from this - the last/ 2nd to last round under Bush and Co. - of the US China Strategic Economic Dialog. Many feel that while there are real issues to be resolved, it will be hard as the Bush administration is now in official wrap-up.
From the viewpoint of Secretary Paulson though, there is a lot that needs to get accomplished, and while speaking at the Carnegie Endowment he outlined the 5 areas that he feels are going to make up the core of the meetings:
managing financial and macroeconomic cycles; developing human capital; the benefits of trade and open markets; enhancing investment; and advancing joint opportunities for cooperation in energy and the environment..
There are some areas that concern me - the continued focus on RMB (is US inflation not high enough) and a questionable idea that somehow the Chinese are saving too much money - that they should become rampant consumers like their bankrupted American peers:
A major contributor to the structural imbalances is a saving rate challenge in each of our economies. In the United States our saving rate is too low. In China it is too high. In order to effectively deal with this issue, we must address how to adequately provide for our aging populations, including the role of private and public insurance and financing for social services such as health care and retirement.
while I agree that China’s structure issue is a degrading safety net, and that results in a high savings rate, that is not an issue that is structurally more problematic than the average Joe in the US just being fiscally irresponsible with their money. It is apples to oranges, and this is an issue that really should be addresses as a US domestic issue.
Another area where I think Paulson is a bit off:
Full Article: All Roads Lead To China
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