Steering U.S.-China economic relations toward a new normal
By Steven Pearlstein
Wednesday, June 30, 2010
Let's take a moment to note that stock prices fell sharply Tuesday in part because of a downward revision of leading economic indicators -- in China.
I suspect that Richard Nixon and Henry Kissinger had no idea what they were getting us into 40 years ago when they first broached the subject of normalizing relations between the world's most populous nation and its richest. Nor could Bill Clinton and his team have foreseen how imbalanced an economic relationship they were ushering in with the deal that effectively opened U.S. markets to Chinese exports. If we had known then what we know now, we would have surely insisted on tougher terms.
Getting this economic relationship back into balance is the single biggest challenge to the global economy, not just because of its direct effects on China and the United States, but the indirect effects it has on the rest of the world. The alternative is a return to living beyond our means, a further erosion of our industrial and technological base and a continued loss of ownership of business and financial assets.
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