Stephen Roach, chairman of Morgan Stanley Asia, talks with Bloomberg’s Susan Li and Paul Gordon from Beijing about the US calls for a stronger yuan. China is conducting stress tests to gauge the effect of yuan appreciation on companies, a sign the government may be preparing for policy change even as it rebuffs foreign criticism of its 20-month dollar peg.
Criticizing Paul Krugman’s comments that the US should consider a 25% surcharge on Chinese goods, Roach said: “They don’t want to look in the mirror. America doesn’t have a China problem. It really has a savings problem. America has the biggest shortfall of national savings of any leading country in modern history. And when you don’t have savings you have to run current account deficits to import surplus savings from abroad and run massive trade deficits to attract the capital. Last year America ran trade deficits with over 90 – that’s right nine zero – countries. … Isn’t it the height of hypocrisy that America can articulate a particular position in its currency but the Chinese are not allowed to do that.” (Hat tip for transcript: Credit Writedowns.)
Source: Bloomberg (via YouTube), March 19, 2010.
