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10 China Myths for the New Decade- Myth #10: Conclusion

Posted by Author on February 10, 2010

Derek Scissors, Ph.D., Research Fellow in Asia Economic Policy in the Asian Studies Center at The Heritage Foundation, via http://www.heritage.org, January 28, 2010 –

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What the U.S. Should Do

* The foundation of the American economy is more conducive to sustained growth than is the foundation of the Chinese economy. To maintain U.S. international leadership, policy must focus on fundamental human, natural, and technological advantages, not supposed benefits of government intervention.[23]
* The Obama Administration has dramatically failed to adopt clear, comprehensive, and open bilateral and multilateral trade policies. These are the best way to help the U.S. economy and secure American influence, especially influence over China.
* Negotiations for market-oriented reform will be extremely difficult with present Chinese leadership. Such negotiations should not focus principally on the exchange rate, which is a secondary concern. The most pressing matter at the moment is cutting into growing Chinese overcapacity.
* Chinese bond purchases are forced by Beijing’s own system and now almost irrelevant to U.S. interest rates. The level of bond purchases should not restrict American policy choices in the slightest.
* Without enforced limits on Chinese emissions, costly American action to limit greenhouse-gas emission will accomplish nothing. To the extent that a policy response to climate change is desirable, Chinese emissions are by a large margin the first priority.

Conclusion

Myths concerning China encourage bad U.S. policy. Exaggerating Chinese prowess and focusing on secondary issues leads to mistakes in general American economic and foreign policy and an incoherent strategy with respect to the PRC. A better-informed view is only the first step in meeting the real challenges, but it is a necessary first step. (END)

Original from The Heritage Foundation

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