In a new twist, Chinese officials who have been getting an earful from Americans on how to run their economy are now openly rebuking the US for the world’s economic ills — and even dispensing some advice.
From the plummeting US dollar to the US housing market crisis, which have wreaked havoc across the globe, Beijing has been hinting mismanagement on the part of Washington and cautioning about the dangers of keeping markets too open.
The self-confidence of the Chinese, riding on the crest of rapid economic growth on the back of US$1.7 trillion in foreign reserves, was highly evident at the bilateral Cabinet-level talks that began in Annapolis, Maryland, east of Washington on Tuesday.
If at previous meetings of the twice-yearly Strategic Economic Dialogue the Americans have been telling the Chinese how to reform their country using the US economy as an example, it may be the opposite this time.
“In the past, in the dialog or discussions between China, the biggest developing country, and the United States, the most advanced economy in the world, China always hoped to draw experience from the US to guide its own development,” Chinese central bank Governor Zhou Xiaochuan (周小川) said.
“However, this time during our discussions, we see something different,” he told reporters during a break in the talks at the sprawling US Naval Academy.
The chief of the People’s Bank of China said that reforms and market openings could backfire and that it could also be a lesson.
“China is of course interested in learning from the experience of the United States in macroeconomic regulation and using a market economy, and now we also want to see what lessons we can draw from the experience of the US after the turbulence,” he said.
Zhou reserved harsher criticism for the weakening US dollar, blaming it for driving up the price of oil and other commodities, stoking inflation and dampening the growth of developing countries reeling from exchange rate turmoil.
Last week, Sun Zhenyu (孫振宇), the Chinese ambassador to the WTO, asked Washington to take action to stabilize the dollar and raised concerns over a “rising sentiment of protectionism” in the US, saying that it could threaten global trade.
“As a major currency for international reserve, the dramatic depreciation of the dollar has led to shrinking national reserve of many countries and reduced social welfare,” Sun said.
The US currency has slid more than 30 percent since 2002.
With the yuan having appreciated more than 20 percent against the dollar over the last three years, US Treasury Secretary Henry Paulson this time dropped his familiar theme of pressing for the Chinese currency’s appreciation in his opening remarks.
Some US officials have blamed the yuan as being kept artificially low, saying it was a key factor in the US trade deficit with China, which hit a record US$256.2 billion last year.
As Beijing paraded Zhou and Chinese Finance Minister Xie Xuren (謝旭人) before the foreign media for briefings on the summit’s session on “Managing financial and macroeconomic cycles,” Washington settled for US special envoy for China Alan Holmer to talk to the reporters.
US Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson, who led the US side at the session, did not meet the media on Tuesday.
Some US officials think China could be highlighting the US housing crisis that has sparked a global credit crunch to delay any major financial market reforms at home.
“There are lessons to be learned from the economic problems in the US and ... there will be significant costs to China if they were to slow down with respect to their (liberalization of the) financial sector — the central nervous system of any country,” Holmes said.
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