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Surpluses to blame for US deficits

THE current account deficits of the United States was the result of surpluses in many countries, the People's Bank of China Assistant Governor Guo Qingping said over the weekend.

A current account deficit occurs when more money is being paid out than brought into a country.

Guo, speaking at the Global Think Tank Summit in Beijing, said excess savings in many countries, not only China, had also contributed to the crisis.

The US imported goods from various countries and China's exports only took up about 12.1 percent of its imports in 2008, Guo said.

The countries' savings then flowed into the US and boosted its domestic demand, which further increased other countries' current account surpluses and in turn helped inflate the real estate market in the US, he said.

Guo also called for the reform of the international financial system at the summit.


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