China Tells U.S. To Fix Its Economy

BEIJING (AP) -- China promised more currency reform to ease trade tensions but told Washington to get its own economy in order as the two sides opened high-level economic talks Thursday amid a global financial crisis.

The unusual Chinese appeal at the Strategic Economic Dialogue highlighted the close links between the world's largest and fourth-largest economies and the global importance of their ability to keep relations smooth.

China's envoy, Vice Premier Wang Qishan, said Beijing was contributing to global stability by keeping its own economy growing strongly.

The chief U.S. envoy, Treasury Secretary Henry Paulson, said engagement between China and the United States has helped in managing the crisis. Officials said both sides stressed the importance of cooperation to combat a potential rise in trade protectionism.

But in unusually pointed language, China's central bank governor, Zhou Xiaochuan, blamed the crisis on U.S. financial excesses and said they should be fixed.

"The important reasons for the U.S. financial crisis include excessive consumption and high leverage," Zhou said in a speech to the meeting, according to Jin Qi, a central bank official who briefed reporters. "The United States should speed up domestic adjustment, raise its savings rate and reduce its trade and fiscal deficits."

The two-day meeting was not expected to produce breakthroughs on trade or other sensitive issues. The two sides signed a pact Thursday to cooperate in financing for projects to improve energy efficiency and were due to work Friday on an investment treaty.

Speaking earlier as Paulson listened, Wang appealed to Washington to "take the necessary measures to stabilize the economy and financial markets, as well as to guarantee the safety of China's assets and investments in the United States."

Wang did not elaborate, but Beijing owns $585 billion in Treasury debt that has helped to finance U.S. budget deficits, and a weak dollar and financial turmoil have fueled Chinese anxiety about such investments.

U.S. officials said the Chinese side promised more currency reforms. Washington and other trading partners say China's yuan is kept undervalued, giving its exporters an unfair price advantage and adding to its trade surplus. Some American lawmakers are calling for punitive action against Beijing.

"The Chinese continued to reinforce to us that they were committed to continued reform, and by that I mean continued appreciation (of the yuan) over time," said an American official who briefed reporters on condition he not be identified further.

The American officials said they did not know details of what Wang meant by protecting Chinese investments. But they said there was extensive discussion of steps the United States was taking to stabilize its economy.

The yuan has risen 20 percent against the dollar since Beijing cut its peg to the dollar in July 2005. But it has fallen this week in government-controlled trading -- including a nearly 1 percent decline Monday, its biggest one-day drop in three years -- in what analysts suggested was a message from Beijing to go easy on the issue.

The yuan's drop Monday also might have been meant as a warning to President-elect Barack Obama, that talks will be more effective than confrontation, said Frank F.X. Gong, chief Asia economist for JP Morgan Securities Ltd.

Obama has yet to say whether he will continue the dialogue. Some analysts have speculated that Obama and the U.S. Congress will take a harder line on China.

China's economic growth is expected to slow this year to about 9 percent, down from last year's 11.9 percent. Communist leaders worry about rising job losses, especially in export industries, and the possibility of unrest.

Beijing is launching a 4 trillion yuan ($586 billion) stimulus package meant to revive slowing growth through heavy spending on construction and other projects.

"We have always believed that if China can manage its own affairs well and maintain relatively stable and fast development of the domestic economy, that is itself the biggest contribution we can make to international economic and financial stability," said Jin, the central bank official.

Paulson is accompanied by U.S. secretaries of agriculture, labor and health, the U.S. trade representative, officials of the Treasury and Commerce departments, and others.

Associated Press Writer Henry Sanderson contributed to this report.

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takeover 12/4/2008 11:29:00 AM The communists have won without firing a shot! And we (the USA) played willingly into their hands.
Takeover? 12/4/2008 4:25:00 PM OK, Which one of you greedy capitolistas sold 'em the rope? (next time, charge more- if there is a next time)
This is what happens when... 12/4/2008 4:25:00 PM This is what happens when you let trial lawyer corrupt politicians run a country. The Chinese are telling us what to do. How far we have come. It is sad, American has become so weak, the paper tiger at they say. We have been sold out by our elected officials. May the fleas of a thousand camels infest their armpits.
Who's Got The Money 12/4/2008 4:46:00 PM I have to agree with the takeover comment. China has beaten us at our own game and is sitting on a trillion and half dollars of our money. In retrospect, everybody wanted the cheap goods being made there without realizing that it cost jobs here. Our corporations were more than happy for us to pay the same price for goods made in China while they reaped enormous profits at the expense of American jobs. We all bought into it so long as someone else was suffering the consequences. We've met the enemy, and it's us !
China/USA economy 12/4/2008 4:52:00 PM All we ever thought about was under priced goods from China, easy credit when it never made sense. Way to much debt. Just keep shopping at the worlds largest retailer and this will continue to help the Chinese economy. I am not sure we are ever going to learn. We have just about ruined our domestic manufacturing base. What do we have left?
What A Sad Joke 12/4/2008 4:59:00 PM This would be a joke, if it weren't really happening. The Chinese, through protectionist trade practices, government subsidized businesses, poor quality (but low price), and outright product dumping on the US, are now telling us to clean up OUR economy? They are a big part of why we have lost our manufacturing base, along with short-sighted greedy CEOs interested only in the next quarter so their bonus is bigger, and unions wanting full pay for no work (can you say "jobs bank"?). Now I know how Great Britain felt when they lost their pre-eminent status as the major power in the world to the US.
FIX our Economy? 12/4/2008 5:19:00 PM OK, sure no problem Wing Sing a Ding a Ling. How about we Boycott all of your crap that we buy from you which is keeping you in business?
With Power comes Responsibility 12/4/2008 5:25:00 PM Until China can step up to the plate and provide all of the security, scientific and humanitarian services to the world as the U.S. has done, they don't have a say in my book. China - Become a full-service super-power or STFU.
China and economy 12/4/2008 7:32:00 PM Americans always look for bargains. Have we forgotten that the reason the goods are coming from China is because American companies have partnered and set up operations in China. The Chinese are industrious and hard working and also masters in copying. Where were many of the managers educated other than in the states and carried back technology with them as well. We need to know that the Chinese are graduating 10 times the numberof science students we are. We do need a wake up call and it must be sounded at home. Yes the enemy is 'us' and are high flying financial gurus.
It's the UAW's Fault 12/4/2008 8:06:00 PM I think the UAW is to blame!!
Fix What??? 12/4/2008 8:14:00 PM Americans are "addicted" to the cheap prices of oil and Chinese goods. If you don't believe that look at where your clothes, electronics, small appliances and everything else we buy is made. Buy American, except those crappy cars...And I am certain Barack will make sure the Automotive bailout is on Bush's watch.
Only a few of you got it right 12/4/2008 10:13:00 PM A few of you got it right, by saying the enemy is "us", but it really truly is "us"...stop buying the crap and watch what happens, stop voting for bs politicians that don't "get it", read your shareholder voting ballots, buy only from companies that you feel are being fair to the U.S. and its people, but you "Public John Q" won't, so you get what you deserve, that's all I can say. When will the American people realize that companies will take advantage of you, but only if you let them, that countries will take advantage of you, but only if you let them, that political leaders will take advantage of you, but only if you let them...be smart, look at what you are buying, SHOP for crying out loud...don't just buy, make conscious decisions...with stocks, with your votes, get active with your choices...you don't think the consumer has power...look at the gas prices now (which brings up another point, why don't we send the big 3 to the oil companies and tell them to say "Lend us the billions or we'll stop building vehicles, then how much will your fuel be worth?" kidding...sort of). We have the power to make America great again, and if there is anything that comes out of this, I pray it is an awakening of the people to get involved, don't just write on a forum, write to your politicians, join groups that have some power to lobby for us...anyway, I digress.
China says fix your economy 12/4/2008 10:30:00 PM How much product from China do you own? Do you look for and buy American mde goods when you can? Every American should take respondibility for our loss of jobs. However the product are disguised so well we cannot find American made products. Who would have guessed the dog food we use has Chinese meat in it.
They're telling us to fix it? 12/5/2008 7:30:00 AM The Chinese can fix it by trading fair with proper currency values and generally following the same rules our manufacturers have to follow. By the way, as a consumer, I buy American as much as possible. The slight increase in price is worth it. Retailers give us little chance to buy American since they make a windfall on made in China wholesale price and near made in USA retail price. Our government can help with a harder line on China and some creative tax incentives for retailers. As far as the downturn on tech graduates, our young people have to find work that can't be outsourced in order to survive, tech no longer is a viable option.
CHINAS WOES 12/5/2008 9:55:00 AM THAT IS ABSOLULELY INSANE TO THINK THE USA CAN FIX CHINAS EXPORT PROBLEMS WHEN THIS COUNTRY IS IN SUCH A FINANCIAL MESS. WE DID THIS THING TO OURSELVES BY EXTENSIVE OUTSOURCING OF GOODS AND PRODUCTS OVERSEAS AND USA CONSUMERS ARE TO BUY THEIR PRODUCTS AS THE US FACTORIES CLOSE AND LEAVE FOR FOREIGN SOIL. PEOPLE WITHOUT MONEY AND JOBS CAN'T BUY ANYTHING WHEN THEIR JOBS ARE LOST AND INDUSTRIES ARE NEVER TO RETURN. WHAT PART OF THIS IS THE US GOVERNMENT AND BIG BUSINESS NOT UNDERSTANDING
Chinese Fix 12/5/2008 9:57:00 AM We should do exactly what the Chinese official told us to do and fix it....but do it the same way they fixed their economy. Lets manipulate our currency and control imported product like they do! The result will be higher employment and better paying jobs in the US.
Who said I wanted cheap crap? 12/5/2008 11:12:00 AM I don't remember telling companies like Stanley Tools that I demanded they dropped price's. I'm OK with the price going up 3% or 5% as long as the jobs stay here in the USA. It's the CEO's who have told the US people that the only way they can be competative is to move thier products overseas where labor is cheaper, then the cost goes up anyways. Now I'm NOT an economist, I'm probably one of those "stupid" Americans. I went to public school and graduated in 1988, NY State none the less. But even I can figure out that if you move everything overseas and terminate your US labor force thereby reducing your labor cost's you increase your profit margin. Then you go to cheaper materials and again increase your profit margin. Then when you raise your prices, 5 years later, don't you increase your profit margin again? You know if you just raised your prices 3% way back when, I would still have a job, be paying tax's, buying groceries, a car, ect... OOOO wait, you wouldn't be a multimillionaire though would you? ..... This is one of the definitions of greed. The CEO's greed has severly damadged the ability of many people to buy food, clothing, ect...
Taxes-Taxes-Taxes 12/5/2008 11:50:00 AM It is always to blame "THE MAN", just be sure you are blaming the correct one. In this case, blame those that have made the US one of the least competitive (high taxes) in the world. Although we are among the most productive workers in the world with a great amount of ingenuity, the high taxes are the real business killer. To purchase one AMERICAN made good, one must pay taxes from beginning to end. If five companies touch the product - the government gets a share of the profit from each of those companies. Oh, did I forget the local sales taxes for when you actually purchase it!! We need to get rid of the IRS (FLAT TAX) and dramatically lower the taxes for American corporations willing to produce goods in the US. If you produce goods in the US, no taxes to anyone that purchases it from you including if that company also sells it to someone in the US. If it is produced outside of the US, normal taxes/duties apply. I wonder how quickly America would become the powerhouse it once was before income taxes zapped our strength.
What Victory? 12/5/2008 2:54:00 PM What Joe Stalin did not do, what Nikita Chruscov promised to do, what Leonid Brezhnev did not succeed to do, George W. Bush achieved in short eight years: To destroy United States of America.
The National Debt 12/5/2008 2:59:00 PM Does anyone ever think about how we finance our trillions of national debt and who actually owns it?? Its not free. Some one has to have the cash on hand and be willing to take the risk to buy the treasury bills and government bonds so the government can keep on spending money it don't have on things like the finacial bailouts and all the spending to fix our economy, to pay for all our entitlement programs. Who do you think buys these? Sure smaller things like investors and pension funds and so on, but the big ones that the US is in debt to are other governments like the rich middle eastern oil countries and China. Who's economy has been growing like gang busters the last 20 years and is going to grow more next year while nearly every one else's is going in the crapper. Who is going to have money to lend us to go into even more debt in the next few years? China is the answer. We are all ready a big debter to China and its only going to get worse. Why should'nt they tell us to get out house in order. Its like A credit card issuer telling a credit card owner to get his act together and pay his bills and debt that he aquired of his own free will if he wants to continue to have a credit line to be able to continue spending money he doesn't have and to insure that the issuer will likely get paid back for the money that they all ready lent out.
The National Debt 12/5/2008 5:48:00 PM The USA government is going to continue to just crank up the presses and print more dollars, T-Bills, Government Bonds (and let the buying power of everyone else's wages fall as the value of the dollar falls) to pay for the US balance of trade, government payrolls, bailouts, entitlements, pork barrels, operations, social schemes, wars, and etc. Foreign Governments and their rulers continue buy the real estate, industries, breweries, hotels, factories and financial institutions located in the USA with the decreasing value bonds and dollars that we gave to them to manufacture the things that we imported and consumed rather than us working to manufacture these things. The USA Government is supporting this selling of our children's legacy to foreign entities by calling it "Investing in America". The USA population will become employees (or maybe slaves) to the foreign countries and individuals that will own everything in the USA. Our children and grandchildren might also have to change to the religion of the business owner if they want a job. We need to re-industrialize and manufacture the things that we consume, rather than pay people in foreign countries to manufacture the things that we consume. Our political and economic leaders seem to have decided that we can continue our economic miracle by becoming a service oriented society cooking hamburgers for each other using imported beef, imported vegetables, etc.; and selling insurance & junk bonds to each other, but definitely not manufacturing or creating anything that we consume. The only way that we can reverse this trend is to re-start making the things that we consume. Future nationalization (ala Mexico) of foreign owned assets is another discussion topic for another day.
Delusional Americans 12/8/2008 12:37:00 PM Since when should the US and it's citizens ever be told what to do by a Communist country. All of our politicians and corporate leaders who have allowed China to invade our economy and buy up our debt and our dollars should be lined up against the Vietnam memorial blindfolded and shot!!! Wake up people! The US is being squeezed by the Chinese financially and the Russians militarily. Why do none of our leaders recognize this? Who do they actually work for now? Obviously it's not for the US! Neither the Democrats or Republicans are getting it done. Everything Ross Perot told US back in 1992 has now come true. What will it take for the American people to realize what these corrupt politicians have done to US. BREAD & SOUP LINES
America 12/8/2008 7:01:00 PM Now Now Now, the United Staes has been taken over by Marxists, duly elected.Just be quiet and take it...it's over with...Comrade
Huge Import Duties on Manufactured Goods ! 12/8/2008 10:25:00 PM There is only one painful way out of economic mess we are in. Break all the Free Trade Agreements and Most Favorable Nation Treaties that we have signed, and start charging 100% duties on all imported goods, except Machinery and Raw Materials ! This would give the goverment all the money it needs to pay for all of its expenditures to create jobs and improve the economy; and because the price of everything that we purchase will increase, if will force us into being frugal, until all of the ofshore industries are forced to come back and start manufacturing in the USA, creating all of the jobs that were lost to foreign manufacturing. If you think this idea is far fetched, look at Brazil, with 100% or more duties on must imports, it is today one of the strongest economies in the world, and most everyting that the coununtry consumes is made in Brazil. There is an answer; but will politicians have the gut to bite the bullet, and pass all of the required legislation ??? Maybe Barrack Obama might have the guts to do it, since he is a great advocate of Change. If not, we will never be able to repay China the $585 Billion that we already owe them, and the aditional $586 Billion that Paulson will want to borrow from them to pay for the Bank Bailouts and saving the Bankrupt USA owned Automobile Companies, that can't even hold their own against the Japanese and Korean Efficient Manufacturing. Maybe the 100% duty will help to put them back on thir feet ! If not, they are definitely beyond saving. God Help America ! We need all of the Help that we can get ! AMEN
The English Disease 12/9/2008 12:24:00 PM As an older person I remember after WWII when the English government destroyed their industrial capacity, the world called their situation the English Disease. We need to educate more Scientists, Doctors and Engineers to improve our balance of trade. We already have way too many Artists, Historians, MBA's, Philosophers, Poets, Theologians, Actors, etc.
WHY NOT USE INVESTOR MONEY 12/10/2008 1:16:00 AM I still not understand why the first to paid for mistake of company is the consumer. A lot of people as retrieved their money from the 401K and stock market because they afraid to loose everything. Now the government has take advantage of those lost for loans money to weak industry. I thing you should give the opportunity to the people that have money to invest in those industry with a high credit on tax and good interest return. Before use the money of everybody why not rescue from the money that the good investor has to help stabilize the economies. I think if you are smart enough to keep healthy financing you should be the one first to benefit of those investment and live the money from the tax payer where it should be for it means help hospital, college fund, school reform, restart made in USA industries, invest in the knowledge of American, stop sending the best student oversea, and the more important doing finish product here after as extract mineral resource from our ground. We grow cotton here and sell for nothing oversea where we will buy now our fabric back. Company tell us that labor is cheaper oversea but how do you calculate the cost of a robotic assembling line where the only cost is the power and maintenance. Industry as change and we can compete right here in the USA.
RE: Delusional Americans 12/11/2008 12:45:00 PM I agree Americans are delusional but don't blame the politicians, they are only doing what the American people are wanting them to get and stay elected and keep their jobs. The American people are completely unwilling to make any sacrifices like big tax increases and significant cuts in entitlement programs that are needed to keep up the spending on programs the American people want. They want their Medicare and Social Security and infrastructure. They want it all, but don't want to pay for it. Everyone’s saying, any sacrifices have to be done by someone else, not me, my needs are too important, so in the end nothing gets done and they have add to the national debt with whomever is willing to buy the treasury bills and so on, be it China or the Middle East.
Don't believe a word 12/11/2008 2:45:00 PM I would believe a word they say about their economy anyway. The communist Chinese government fudges facts and figures. They produce artificial jobs to keep their own people working, such as putting two or three people to work at a job that only takes one. The truth is, they are starting to feel the burn of the bad economies around the world. They want Americans to start buying their poisonous,hazardous products again. Their just pi**ed off that no matter what they do, things aren't getting better. And the fault lies at us stupid Americans that won't buy their crap products. It's time to bring back the manufacturing to the US. The global economy was a myth.
We must change first 12/19/2008 3:50:00 AM It is a fact that China finances the U.S deficit. It is known that Americans buy more foreign goods, such as vehicles, accessories, etc. The government also tries to balance the scales by bailing out faltering companies. However we as a people need to make a change as well. As an employee of the banking credit card industry I get almost daily requests from people demanding more credit than they already have. An example is a customer wanting to make a purchase when they have no funds available on their account. I also see demands for increased credit limits on their revolving debt accounts. The real issue is us. We need to start paying cash for items or else save it until we can afford it. We buy mortgages on debt, get approved for vehicle loans on credit and then go to the store and use our credit cards. Does that make any sense?
Got to Start Now 2/5/2009 2:08:00 PM We got to start looking for AMERICAN MADE PRODUCTS. If you can't find an item that is made in the USA and when you open the box and the item is broken or just a piece of crap. Take it back, make them make it right. We've got to stop buying the the same crap over and over. The only ones that win are the stores and China. I run a small family held manufarturing co in the US started in 1944. We have always made all of our own products and always will. It does my heart good to hear the comments that everyone are making. There might be some hope for us yet. At least it gives me hope, to keep on holding on.

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