There are always ample bilateral issues of strategic importance
for China, the world's fastest-growing developing economy, and the
United States, the world's largest economy, to discuss.
The second round of the China-US Strategic Economic Dialogue
that begins today in Washington provides a much needed opportunity
for the two sides to exchange ideas and coordinate efforts to
address sticking points in bilateral trade and economic
relations.
As two major growth engines in the world economy, China and the
United States have born the brunt of the increasing trade imbalance
in their own ways.
Accelerated accumulation of foreign exchange reserves, largely
fueled by a soaring trade surplus, has made it more difficult for
Chinese policymakers to check the ongoing growth in excessive
liquidity.
The 11.1-percent GDP growth in the first quarter of this year
indicates that China's sizzling economy may be in danger of
overheating if policymakers do not respond promptly.
Meanwhile, a ballooning current-account deficit not only worries
US policymakers but has given rise to a call for protectionism in
the United States.
To address the trade imbalance, both China and the US need to
examine a number of their own domestic issues which could be the
root causes.
These issues are as difficult as they are important.
Besides pursuing a more flexible foreign exchange regime that
might marginally narrow its trade surplus, the overriding task for
China is to facilitate the change in its growth model. It needs to
shift the balance of growth away from investment and exports toward
consumption.
The US must understand that the real cause of its trade deficit
is that Americans spend too much and save too little. No external
measure can fix that domestic issue easily and painlessly.
All these issues demand solutions. Yet, any unilateral act to
seek an immediate solution risks creating more problems.
Now, the strategic dialogue provides the chance for the two
countries to address critical economic challenges facing their
economies from a long-term perspective.
Policymakers from both sides should make the most productive use
of the second of the twice-yearly discussions to pursue solutions
that will allow both countries to benefit from the growing
bilateral trade and economic relationship.
(China Daily May 22, 2007)