China to U.S.: Fix Your Own Economy
Mar 19, 2014 12:02 PM ET
By William Pesek
Watching Chinese officials turn the tables on the U.S., I can't help but wonder if they've been reading Stephen Roach's new book.
Roach is an economist who made his name at Morgan Stanley. But in "Unbalanced: The Codependency of America and China," he dons a psychologist's hat to warn about how the "marriage of convenience" between the two biggest economies is going awry in ways that could send bad vibes from Jakarta to Johannesburg. The impending breakup will not be pretty -- especially for the U.S.
"This relationship obviously brings important benefits, but there are serious risks," Roach argues.
"Psychologists warn that codependency ultimately leads to identity crisis, denial of responsibility, and the tendency to blame others for problems. China and the United States manifest most aspects of that mutual pathology."
That was the clearly subtext at last month's Group of 20 meeting, where Jacob Lew did what Treasury secretaries do best: call on an Asian economy to ease the U.S. 's pain. Japan used to be the target of this age-old blame game; now it's China. When asked whether China was doing enough to rebalance its economy away from excessive investment and cheap exports, Lew said: “I have yet to see the signs that they are moving with the speed that we would want.” Washington, he added, will continue to press China's leadership “to move faster, with more clarity and more immediacy.”
That drew an unexpected response from Lew's Chinese counterpart, Lou Jiwei: "They have always been saying that China should boost its consumption ratio and the U.S. should boost its investment ratio, but that structural change is not happening in the United States," Lou told Bloomberg News in a Feb. 22 interview. The U.S. recovery, he said, "is being helped by monetary policy and not much by structural adjustment."
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http://www.bloombergview.com/articles/2014-03-19/china-to-u-s-fix-your-own-economy
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