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Trying to check China by overstating its power
Source: Xinhua |
August 19, 2010, Thursday
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SOME Western countries have been throwing out various "China responsibility" theories after the global financial crisis. These responsibilities form a system that seem to grant China responsibility to save the world.
These countries have been exaggerating China's strengths and influences in a bid to let China shoulder more "world-level obligations and responsibilities" and also make China increase its "contributions" to tackle the global economic downturn. The objective is to slow down and check China's development.
These exaggerations include: overstating the effects of China's US$2 trillion foreign exchange reserves and overstating China's influence on the global economy, especially the claim that China's increasing demand leads to increase in the prices of international commodities. These exaggerations also overlook the reality that the abuse of financial vehicles and speculation in the markets were fundamental causes of the crisis.
These countries are also exaggerating China's position as the world's largest greenhouse gas producer and are asking it to shoulder obligatory requirements for emission cuts; at the same time these countries don't want China to enjoy preferential treatment available to developing countries. They believe that China's demand for "common but differentiated responsibilities" is an attempt to shed responsibility.
It's absurd to ascribe the main reason for the global financial crisis and global economic imbalances to the high savings and trade surpluses in China and certain other countries.
The core reasons for the global financial crisis are the defects of the US economic system, the loopholes in the international financial system, and the lack of supervision. US economic policies have been focusing too much on domestic problems and have "neglected" the responsibility of the US dollar as the top international reserve currency during the global economic downturn.
The low savings and high trade deficit in the United States are a result of its long-term policy choices and consumption habits, and not a consequence of China's high savings and trade surplus. There is an obvious time lag between China's high trade surplus and the US low savings, indicating the two have no cause and effect relation.
The United States had built its high consumption habit long before China accumulated huge foreign exchange reserves. The latest round of declining American saving rates began in 1984, and dropped to 2 percent in 1999, maintaining the low rate for six years. The figure further dropped below 1 percent from 2005 to 2007.
The trade deficits in the United States started in the early 1980s and have lasted for almost 30 years. At the same time, deficits were constantly reported in government revenue and expenditures, except during the later years of the Clinton administration. These are not new developments that have occurred in recent years.
Though the global economic downturn was caused by the sub-prime crisis in the United States, the core issue is the defective US economic system and neo-liberalism in economic policies that made the United States accumulate up to US$10 trillion of trade deficit, financial deficit and individual credit deficit. Neo-liberalism is a market-driven approach to economic and social policy.
Zhang Jianhua, head of the Research Bureau of the People's Bank of China (PBOC), said the "trade surplus responsibility" theory is a plea for some Western countries to map out trade protectionism.
These countries have been exaggerating China's strengths and influences in a bid to let China shoulder more "world-level obligations and responsibilities" and also make China increase its "contributions" to tackle the global economic downturn. The objective is to slow down and check China's development.
These exaggerations include: overstating the effects of China's US$2 trillion foreign exchange reserves and overstating China's influence on the global economy, especially the claim that China's increasing demand leads to increase in the prices of international commodities. These exaggerations also overlook the reality that the abuse of financial vehicles and speculation in the markets were fundamental causes of the crisis.
These countries are also exaggerating China's position as the world's largest greenhouse gas producer and are asking it to shoulder obligatory requirements for emission cuts; at the same time these countries don't want China to enjoy preferential treatment available to developing countries. They believe that China's demand for "common but differentiated responsibilities" is an attempt to shed responsibility.
It's absurd to ascribe the main reason for the global financial crisis and global economic imbalances to the high savings and trade surpluses in China and certain other countries.
The core reasons for the global financial crisis are the defects of the US economic system, the loopholes in the international financial system, and the lack of supervision. US economic policies have been focusing too much on domestic problems and have "neglected" the responsibility of the US dollar as the top international reserve currency during the global economic downturn.
The low savings and high trade deficit in the United States are a result of its long-term policy choices and consumption habits, and not a consequence of China's high savings and trade surplus. There is an obvious time lag between China's high trade surplus and the US low savings, indicating the two have no cause and effect relation.
The United States had built its high consumption habit long before China accumulated huge foreign exchange reserves. The latest round of declining American saving rates began in 1984, and dropped to 2 percent in 1999, maintaining the low rate for six years. The figure further dropped below 1 percent from 2005 to 2007.
The trade deficits in the United States started in the early 1980s and have lasted for almost 30 years. At the same time, deficits were constantly reported in government revenue and expenditures, except during the later years of the Clinton administration. These are not new developments that have occurred in recent years.
Though the global economic downturn was caused by the sub-prime crisis in the United States, the core issue is the defective US economic system and neo-liberalism in economic policies that made the United States accumulate up to US$10 trillion of trade deficit, financial deficit and individual credit deficit. Neo-liberalism is a market-driven approach to economic and social policy.
Zhang Jianhua, head of the Research Bureau of the People's Bank of China (PBOC), said the "trade surplus responsibility" theory is a plea for some Western countries to map out trade protectionism.
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