Recession Opens U.S.-China Rift

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http://news.yahoo.com/s/bloomberg/20081229...erg/ai3pbnjy7ty

Recession Opens U.S.-China Rift Paulson Talks Bridged

The global recession is re-exposing fissures in U.S.-China relations that Treasury Secretary Henry Paulson spent more than two years smoothing over.

 

Heightened tensions between China and the U.S. may worsen a contraction in world trade that already threatens to deepen and prolong the economic downturn. The friction comes as President- elect Barack Obama readies a two-year stimulus package worth as much as $850 billion that will require the U.S. to borrow more than ever from China, the largest buyer of Treasury securities.

 

¡°The American economic slump is running into the Chinese economic slump,¡± says Derek Scissors, a research fellow at the Washington-based Heritage Foundation. ¡°It's creating the conditions for a face-off between Beijing and the U.S. Congress, possibly leading to destabilization of the world's most important bilateral economic relationship.¡±

 

What separates China from the rest of the world is its incredibly low level of consumption relative to GDP,¡± says Brad Setser, a fellow at the Council on Foreign Relations in Washington. ¡°What can China do that would most directly help the world economy during a period of very severe weakness? Get its consumption back up to 40 percent of GDP.¡±

 

 

 

 

For years the experts have said we americans need to save more. The chinese for the most part do save . Now it is we all have to spend our way out of this mess. So say the experts.