[Mb-civic] In Beijing, A Growing Problem - Washington Post

[William Swiggard]

In Beijing, A Growing Problem

By Sebastian Mallaby
Monday, July 11, 2005; Page A15

BEIJING -- Three members of the Bush Cabinet are here today, trying to 
patch up economic relations. It's not going to be easy. In conversations 
in China this past week, I heard the muddle-through-uneasily forecast. 
And I heard the downward-spiral theory.

The downward spiral starts with China's cooling economy. Slower growth 
is expected to bring a tripling of China's trade surplus this year, 
triggering more friction with Congress. But the downward spiral is more 
than just a cyclical forecast. It's about Chinese savings and investment.

<>Right now China saves prodigiously, putting aside nearly 50 percent of 
gross domestic product. But it invests almost as much, plowing nearly 
all the savings back into its growth machine. The small gap between 
savings and investment drives China's global trade surplus. The 
downward-spiral theory holds that the gap will grow over the next five 
to 10 years, and the trade surplus will grow with it.

http://www.washingtonpost.com/wp-dyn/content/article/2005/07/10/AR2005071000997.html?nav=hcmodule 

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