Tags: Yale | Roach | Americans | Yuan | china

Yale's Roach: Americans Should Save More, Not Attack China's Yuan

Wednesday, 21 Mar 2012 07:37 AM

U.S. politicians would like to blame China’s currency for its trade imbalances, but the real problem is that Americans simply refuse to save, says Stephen Roach, former non-executive chairman of Morgan Stanley Asia.

U.S. deficits are spread across multiple countries, not just with China, Roach tells CBNC. Demanding that China devalue its yuan won’t make up for the lack of saving at home, he says.

"Congress doesn't want to accept responsibility for the lack of U.S. savings. It's much more convenient for them to point the finger at China, but that's not going to fix America's problems by any stretch of the imagination," says
Roach, currently a senior fellow at Yale University's Jackson Institute of Global Affairs.

U.S. politicians on both sides of the aisle have turned the value of the yuan into election-year fodder. Nevertheless, the tide seems to be turning as the Chinese economy cools.

China reported a major trade deficit in February after a surplus in January. The monthly number came in at a deficit of $31.5 billion following a $27.3 billion surplus the month before.

It was the biggest monthly deficit since 2000 and reflected a combination of lower foreign demand for Chinese goods and increased imports as the Asian country consumed more.

Meanwhile, a Chinese government minister made the case for wider Chinese investment here.

"We hope the United States will open up so that Chinese firms can invest there and thereby increase U.S. export capacity," Commerce Minister Chen Deming said in Beijing, reports Reuters.

"The productivity of the United States is very high and the quality of its work force is very good. If the United States allows China's manufacturers to develop there, the overall U.S. trade deficit will fall."

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