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Fang Xinghai — Director General of Shanghai's Office for Financial Services, and an important figure in China's Communist Party — made some strikingly candid assessments of the economic relationship between China and the U.S. in our show today. The take-home message?
The United States will succeed or fail on its own in this global economic crisis.
Here are the key excerpts:
FANG XINGHAI: Just in terms of investing our foreign exchange reserves in U.S. government bonds, I think from an investment point of view, it’s pretty dumb to buy so many U.S. Treasuries. Clearly the U.S. dollar is not going to be worth as much as it is today ten years down the road. So we should diversify more in our investments.
. . .
TOM ASHBROOK: Now if [the use of the yuan as an international currency] catches on, what do you think, as an economist ... what does that mean for the United States?
FANG XINGHAI: Well, it takes time, but it offers a good competition for the United States. Which is good! The U.S. needs some competition! You should manage your policies better. To paraphrase President Obama, there’s a collective failure on the U.S. policymakers’ side. And it’s a big wake-up call to the United States. The U.S. can compete, there’s no problem with that. It's just that you have to make better decisions.
. . .
FANG XINGHAI: Just one point — the U.S. will succeed or fail largely because of the U.S. itself. China plays a role, but it’s simply wrong to say that somehow the U.S. recovery depends on China’s cooperation in buying more U.S. Treasuries. That’s totally untrue. And the U.S.'s domestic policy, things like printing money or so, the U.S. should not be consulting with China before making these decisions! That’s ridiculous.
TOM ASHBROOK: Really, even now, when we’re so tightly connected, especially around dollar flows?
FANG XINGHAI: Well, China certainly can help the U.S. in terms of making the treasury market smoother. That’s also in China’s interest, by the way. But I think it’s an overstatement to say that somehow the U.S.’s recovery depends on China’s cooperating with the U.S. I think that’s overblown.
TOM ASHBROOK: There’s a kind of “you’re on your own, buster” message from Shanghai.
You can listen to the whole hour — and add your comments -- here.
This program aired on April 6, 2009. The audio for this program is not available.
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