The Obama administration is increasingly signalling that the US will not continue to be the world’s consumer and importer of last resort. The clearest statements came last month from Larry Summers…
The US, he said, must become an export-oriented rather than a consumption-based economy and must rely on real engineering rather than financial wizardry.
Put starkly, Mr Summers has stated that China can no longer behave like China because the US intends to behave much more like China. The world economy cannot have two, or even one-and-a-half, Chinese growth strategies from its two most important economies. Which will prevail?
That is Fred Bergsten and Arvind Subramanian writing in the FT.