Stiglitz has harsh words for US pol­icy mak­ers on China

China Daily (Canada) - - ACROSSAMERICAS -

Joseph Stiglitz, one of the world’s most in­flu­en­tial econ­o­mists to­day, sounded some se­ri­ous warn­ings to US pol­icy and law mak­ers in his ar­ti­cle China Cen­tury in the lat­est Van­ity Fair mag­a­zine.

The Nobel Prize lau­re­ate in eco­nomics, who has vis­ited China many times, said that 2014 was the last year in which the US could claim to be the world’s largest eco­nomic power.

“China en­ters 2015 in the top po­si­tion, where it will likely re­main for a very long time, if not for­ever. In do­ing so, it re­turns to the po­si­tion it held through most of hu­man his­tory,” he wrote.

A re­cent re­port by the In­ter­na­tional Mon­e­tary Fund said when mea­sur­ing na­tional eco­nomic out­put in real terms of goods and ser­vices, China will pro­duce $17.6 tril­lion this year, com­paredto the $17.4 tril­lion for the US.

Stiglitz ob­served dif­fer­ent at­ti­tudes of the two na­tions on be­ing No 1. “Americans want very much to be No 1—we en­joy hav­ing that sta­tus. In con­trast, China is not so ea­ger,” he wrote.

Stiglitz be­lieves that China did not want to stick its head above the para­pet be­cause be­ing No 1 comes with a cost, cit­ing the ex­am­ple of pay­ing more to support global bod­ies such as the United Na­tions. He also pointed out that China un­der­stands full well the US’ psy­cho­log­i­cal pre­oc­cu­pa­tion with be­ing No 1, and was deeply wor­ried about what the US re­ac­tion would be when it no longer was.

Views among Chi­nese are not to­tally agree­able with Stiglitz’s. Most Chi­nese may only rec­og­nize that their coun­try is No 1 in pop­u­la­tion, although that might be over­taken by In­dia in 2028.

For many Chi­nese, be­ing No 1 does not mean that much. Just as China’s Vice-Premier Wang Yang said last week in Chicago at the 25th ses­sion of the China-US Joint Com­mis­sion on Com­merce and Trade (JCCT) that any­thing mul­ti­plied by 1.3 bil­lion peo­ple is huge while any­thing di­vided by 1.3 bil­lion is tiny. Wang was not shy in say­ing that the US will con­tinue to be the most pow­er­ful na­tion and con­tinue to lead the world.

The re­al­ity is that China is still a de­vel­op­ing coun­try, with per capita GDP ranked 89th in the world ac­cord­ing to IMF and 85th ac­cord­ing to the World Bank, be­hind Iraq and South Africa.

Stiglitz noted that the US had made two crit­i­cal mis­takes since the World War II. “First, it in­ferred that its tri­umph meant a tri­umph for ev­ery­thing it stood for. But in much of the Third World, con­cerns about poverty.—.and the eco­nomic rights that had long been ad­vo­cated by the left.—.re­mained paramount,” he wrote.

“The sec­ond mis­take was to use the short pe­riod of its uni­lat­eral dom­i­nance, be­tween the fall of the Berlin Wall and the fall of Lehman Brothers, to pur­sue its own nar­row eco­nomic in­ter­ests.—.or, more ac­cu­rately, the eco­nomic in­ter­ests of its multi-na­tion­als, in­clud­ing its big bank.—.rather than to cre­ate a new, sta­ble world or­der.”

Stiglitz cited the ex­am­ple of US talk­ing about free and fair trade but in­sist­ing on sub­si­dies for its rich farm­ers. “(It) has cast the US as hyp­o­crit­i­cal and self­serv­ing,” he wrote. Other ex­am­ples in­cluded the US wrong and hazardous re­sponse dur­ing the East Asia cri­sis in the late 1990s, some­thing Stiglitz­claims that“a decade and a half after the East Asia cri­sis, the mere men­tion of the US role can prompt angry ac­cu­sa­tions and charges of hypocrisy in Asian cap­i­tals.”

Con­trary to the con­cern of many Americans, Stiglitz ar­gues that China’s growth is com­ple­men­tary to that of the US. “If it grows faster, it will buy more of our goods, and we will pros­per,” he said.

Stiglitz warned that if the US takes ac­tions based on the idea that the world econ­omy is a zero-sum game, that would not only be a “wrong kind of wake-up call” but “ul­ti­mately prove fu­tile.” While many Chi­nese still see the US-led TransPa­cific Part­ner­ship (TPP) as a con­tain­ment scheme aimed at China, Stiglitz also sug­gests that the TPP looks like an at­tempt to cut China out of the thriv­ing Asia sup­ply chain.

The economist crit­i­cized the US for try­ing to block China from car­ry­ing out its global re­spon­si­bil­ity, such as tak­ing a larger role in in­ter­na­tional in­sti­tu­tions. The US Congress has blocked the IMF re­forms that will give China and other emerg­ing economies a big­ger say.

He also crit­i­cized the US for not sup­port­ing China’s ef­forts in as­sist­ing de­vel­op­ing na­tions build their in­fra­struc­ture, such as the ef­fort to cre­ate the Asia In­fra­struc­ture Fund.

“We should take this mo­ment, as China be­comes the world’s largest econ­omy, to ‘pivot’ our for­eign pol­icy away from con­tain­ment,” he wrote.

Stiglitz con­cluded that a new global po­lit­i­cal and eco­nomic or­der is emerg­ing, the re­sult of new eco­nomic re­al­i­ties.

“We can­not change th­ese eco­nomic re­al­i­ties. But if we re­spond to them in the wrong way, we risk a back­lash that will re­sult in ei­ther a dys­func­tional global sys­tem or a global or­der that is dis­tinctly not what we would have wanted,” he wrote. Con­tact the writer at chen­wei­hua@chi­nadai­

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