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发帖数: 2547 | 1 On Friday, the G-20 meeting in Seoul - the summit bringing together the
world's 20 most important economies - concluded. The gathering, the fifth
since former President George Bush revived the grouping in 2008, was the
place where the world was supposed to come together to rebalance the
teetering global economy.
Instead of doing so, presidents and prime ministers deferred solutions to
the most intractable problems to the indefinite future. Worse, they did so
when global commerce is especially vulnerable. Countries are already
erecting barriers to trade and engaging in predatory policies that are sure
to set back growth.
The central obstacle to a global solution? Despite wishful thinking to the
contrary, the world's two largest economies - the U.S. and China - have
interests that are diametrically opposed.
President Obama's visit did little constructive to confront or bridge that
divide, and as a result the global consensus supporting trade could dissolve
, just as it did in the 1930s.
The worst policies unresolved by the summit involve currency. In September,
Brazil's finance minister said an "international currency war" had already
broken out. He was right: In recent months, 18 countries have intervened to
cheapen their money, among them Japan, South Korea, India and Brazil.
Trying to stop the economic arms race, Obama said on Wednesday to fellow
leaders, "The world is looking to us to work together." He was essentially
ignored.
The problem begins and ends with China, because it is the world's largest
exporter. It has earned that position largely by holding down the value of
the renminbi, which now trades somewhere 20% to 40% below its true value.
That makes Chinese exports artificially competitive in global markets. As a
result, China has built up enormous trade surpluses and the world's biggest
stash of foreign exchange - $2.65 trillion at last count.
The United States, on the other hand, is a trade deficit nation, largely due
to China. Chinese trade benefits the U.S. in other ways, but it has
decimated American industry and put Americans out of work.
To get out of this jam, Obama in his State of the Union message pledged to
double American exports in five years. But other countries are competing for
those very same markets. As Brazil's outgoing President Luiz Inacio da
Silva said at the end of last week, "Everyone would like to sell."
At the very same time, to jumpstart the American economy, Federal Reserve
Chairman Ben Bernanke this month announced his "quantitative easing" plan,
which involves increasing the U.S. money supply by $600 billion in one shot.
This will flood the world with dollars and cause the greenback to depreciate
. That means the Chinese will suffer great losses on the American currency
they hold in their foreign exchange reserves.
Beijing is also petrified that Bernanke's plan will end up blowing up its
economy. Investors will undoubtedly take the money he created and put it in
China, resulting in even bigger Chinese property and stock market bubbles
and runaway inflation.
It is time to begin facing economic fact: What is good for America is bad
for China - and vice versa. China is a seller, and America is a buyer.
America is a debtor, and China is a creditor.
It's no wonder Beijing and Washington were unable to come to terms with each
other in Seoul last week - or at any of the other G-20 meetings since 2008.
Going forward, expect tensions to heighten. Minutes after the summit ended,
an obviously annoyed President Obama got in the first shot: "It is
undervalued," he said, referring to the renminbi. "And China spends enormous
amounts of money intervening in the market to keep it undervalued."
The next stage of the contest between Washington and Beijing has just begun,
and the world economy hangs in the balance. |
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