Source: www.ft.com

From Dr Willem Thorbecke.

Sir, Geoff Dyer reports that China’s exports grew faster than expected again in July and that policymakers face a delicate situation (“China trade data reduce slowdown fears”, August 12). It is safe to bet that China will continue promoting exports and that the US will continue stimulating domestic demand. The fact that this combination exacerbates global imbalances and stokes commodity price inflation will not alter the policy mix. Nor will the fact that the US needs a higher national saving rate or that China would receive a higher rate of return investing in the domestic economy.

Fortunately there is a simple way out of this impasse. The US should outsource its economic policymaking to China and China should outsource its policymaking to the US. The Chinese would have US exports humming in no time, and the Americans would not hesitate to spend China's reserves building better schools, fighting environmental degradation and promoting rural development.

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