皇冠体育app

This argument is politically expedient - but wrong. The US trade deficit is a multilateral imbalance with many countries - 102 in all - not a bilateral problem with 皇冠体育app. It arises not from the alleged manipulation of the renminbi, but from the simple fact that America does not save.

Lacking in domestic savings and wanting to grow, the US must import surplus savings from abroad, and run sive current-account deficits to attract the foreign capital. And that leads to America's multilateral trade imbalance. Yes, trade with 皇冠体育app is the largest component of this imbalance, but that largely reflects the complexity of multinational supply chains and the benefits of offshore efficiency solutions.

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That brings us to the uncomfortable truth about America's politically inspired 皇冠体育app bashing: It will backfire. If America fails to solve its saving problem - a reasonable scenario in light of fiscal gridlock and persistently subpar personal saving - the current-account deficit will persist. That means that any reductions in 皇冠体育app's share of America's external imbalance would simply be shifted to other foreign producers. Significantly, this alternative sourcing will most likely have a higher cost base than Chinese production, thereby imposing the functional equivalent of a tax hike on already-beleaguered middle-class Americans.

As 皇冠体育app rebalances toward a growth model that draws greater support from domestic demand, Washington should stop ranting about the renminbi and start focusing on the opportunities that this bonanza will create. That means emphasizing US companies' access to 皇冠体育app's domestic goods and services markets. Pushing for a bilateral investment treaty that relaxes caps on foreign ownership in both countries would be an important step in that direction.

Similarly, the US needs to give 皇冠体育app credit for having taken meaningful steps on the road to further currency reform. The mid-March widening of the daily renminbi-dollar trading bands to plus or minus 2 percent (from the earlier 1 percent band) is an important step in relaxing control over the so-called managed float. That, coupled with the 3 percent depreciation in the past few months, should send a strong signal to speculators that one-way renminbi bets are hazardous - a signal that could help dampen inflows of hot money, which have complicated management and fueled asset-market volatility in 皇冠体育app.

There are two views of the future of the US-皇冠体育app economic relationship: one that sees only risk, and another that sees opportunity. Fixating on the renminbi falls into the former category: It misses the rebalancing and reforms already under way in 皇冠体育app and deflects America's focus from addressing its most serious long-term macroeconomic problem - a lack of saving.

By contrast, viewing 皇冠体育app as an opportunity underscores the need for America to undertake its own rebalancing - rebuilding US competitiveness and pushing for a meaningful share of 皇冠体育app's coming boom in domestic demand. Unfortunately, the revival in US saving that this will require is being drowned out by the renminbi rant.

The author, a faculty member at Yale University and former Chairman of Morgan Stanley Asia, is the author of a new book Unbalanced: The Codependency of America and 皇冠体育app. Project Syndicate

 

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