From Overseas Press

US must adapt to China's new growth patterns

(chinadaily.com.cn)
Updated: 2011-05-27 16:08

The US should focus less on "the China threat" and formulate a more consistent and constructive strategy to benefit from China's economic growth, says an article on the World Politics Review website on May 24.

According to the article, as China has assumed an international economic leadership from the financial crisis - a decade earlier than Beijing's strategists had intended - it urgently needs to rebalance the economy "from the low-quality, export model toward higher-value, domestically driven growth."

The outcome is that China has sped up the change in its patterns in its trade and investment abroad, says the author. China has increasingly focused on importing advanced technology and machinery, particularly in "strategic sectors", a divergence from its original overseas investment strategy, which was aimed at securing key natural resources.

For the US, China's largest economic partner, the implications of its new "multidirectionalism" are significant, says the author. But initial indicators suggest the US is losing out on the first wave of new Chinese overseas spending, with "a flood of [Chinese] money into the Western Hemisphere outside the US."

The author blames political resistance in the US, which has been running high, for the failure. According to the article, although China is eager to expand its investments in US agricultural, natural resource, advanced manufacturing and financial sectors, Chinese officials who are seeking acceptable investment areas from Washington often end up with frustration "by the complex institutional arrangements of the US political economy." Meanwhile, American officials "have expressed concern about the security implications of Chinese capital."

To address these issues, suggests the author, "Washington must accept Chinese overseas investment as an economic reality going forward and design a strategy capable of deploying it in support of the national interest." The US should also consider mechanisms for attracting Chinese capital "in areas where it is needed most, such as urban real estate development and manufacturing."

Additionally, Washington could learn from the European Union's approach, which tends to "maintain a greater distinction between ideological and economic policy differences with Beijing," says the article, especially on "potentially inflammatory economic issues such as the yuan and China's 'market economy' status."