Revamping global financial architecture should temper the "worrisome" global imbalances triggered by the enormous disparities in savings, Morgan Stanley Asia head Stephen Roach says.
"The United States and China both need to play a major role in reducing their respective shares of this problem," Roach told Chinese state media.
"America needs to save more and China needs to save less. Easier said than done!"
According to Roach, if China's leadership would own up to its role in perpetuating the nation's share of global imbalances and take concrete steps toward rebalancing, then the rest of the world would have no choice but to respond to their initiative.
It will now be up to President-elect Barack Obama to say 'no' to China bashing, and 'yes' to globalization, says Roach.
"It will also be up to China to provide greater impetus to private internal demand—in essence, a structural shift that could well help to defuse anti-China protectionist sentiment in the United States and elsewhere in the West," Roach notes.
"It's important to know what needs to be done in China and what the world should do," European Commissioner on Financial Programming and Budget Dalia Grybauskaite told an audience at the University of International Business and Economics in Beijing.
Grybauskaite said that the world cannot solve global problems unless Beijing takes on more responsibilities and internally sustains its high growth and stability. He added that today's international organizations are incapable of dealing effectively with the financial crisis.
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