Tags: Goldman Sachs | Lloyd Blankfein | China | economy

Goldman's Blankfein: US, Communist China Now Have Compatible Economies

By    |   Thursday, 26 February 2015 06:40 AM

Lloyd Blankfein, head of blue-chip investment bank Goldman Sachs, says the U.S. follows a form of government-regulated capitalism, which should make it easier for America and Communist China to succeed in unison with one another.

In an interview with CNN Money, the Goldman CEO said the “overlap” between the two rivals’ economic systems should allow them to work together on investment and bilateral trade.

"The U.S. is not pure capitalism. In fact, there's no place for pure capitalism, unregulated capitalism. We have a regulated system."

In Blankfein’s view, "at the end of the day, everything is going to be a hybrid."

Even though China is on a pace to overtake the U.S. as the world’s biggest economy, Blankfein said American should also be able to succeed.

"Not every year in this century is gonna be China's year, even if it turns out to be their century," he predicted.

Blankfein said China’s leadership has come to realize that unbridled growth, which the government is struggling to bring under control, helped foster corruption and environmental damage.

Stephen Roach, another veteran China observer and former head of Morgan Stanley Asia, said in a column for Project Syndicate it would be a mistake for China to weaken its currency, the renminbi, in the face of the rising deflation and shrinking exports that it is currently experiencing.

“In fact, as China pursues structural reforms aimed at continuing its continued development, forced depreciation is about the last thing it needs,” Roach wrote. “It would also be highly problematic for the global economy.”

Roach said China’s renminbi has appreciated recently more than nearly all of the 60 countries followed by the Bank for International Settlements — up 26 percent in the past four years, compared with 12 percent for the U.S. dollar.

He predicted that if China intervenes to push its currency lower, the U.S. could join global calls for anti-China trade measures, which he said would push the two countries toward “the slippery slope of protectionism” together.

One international bond expert at asset manager AllianceBernstein predicts it could be a stabilizing force if China’s renminbi ultimately becomes a new reserve currency in Asia.

“When China succeeds, the result is likely to be a more balanced global economy and a more level playing field in terms of choice of currency for trade settlement,” wrote Hayden Briscoe, director of Asia Pacific Fixed Income at AllianceBernstein.

“Based on the accumulation of foreign-exchange (FX) reserves, China has simply grown too big for the world economy. The country’s FX reserves are fast approaching $4 trillion, helped by a return to record current account surpluses.”

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Lloyd Blankfein, head of blue-chip investment bank Goldman Sachs, says the U.S. follows a form of government-regulated capitalism, which should make it easier for America and Communist China to succeed in unison with one another.
Goldman Sachs, Lloyd Blankfein, China, economy
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2015-40-26
Thursday, 26 February 2015 06:40 AM
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