Brad DeLong reacts to a Larry Summers article in his blog post "Larry Summers Writes About US Policy Toward China:"
The right things for reality-based political economists to be saying right now are:
To the U.S. Congress: a rapidly-growing China that views the U.S. as a helping friend rather than an enemy is an enormous source of strength and wealth; the overall U.S. unemployment rate is set on the Mall rather than in Beijing; yes, China's economic policies have transferred wealth from America's manufacturers and manufacturing workers to the construction sector and to coastal homeowners--but dealing with that transfer is an internal matter for us.
To the government of China: the longer China delays rebalancing--delays shifting from export-led development driven by an undervalued currency to development driven by domestic demand--the greater the likelihood of a major crash someday, the greater the magnitude of that crash should it come, and the higher the chances that China's economic development will suffer a severe check and that the cadres of the CCP will wind up in the garbage dump of history.
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Posted by: Alice | July 15, 2012 at 07:41 PM