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8 years ago
UPDATE 1-U.S. to tell China exports can't drive growth
July 23, 2009 / 3:19 PM / 8 years ago

UPDATE 1-U.S. to tell China exports can't drive growth

(Updates with more agenda points, quotes)

WASHINGTON, July 23 (Reuters) - The United States will tell Chinese officials in key talks next week the U.S. economic recovery will be slow and structural changes in the American economy mean China cannot rely on exports to fuel its growth, a senior U.S. Treasury official said on Thursday.

China will be told at the Strategic and Economic Dialogue in Washington the U.S. recovery will be "a slower recovery than than what the Chinese are used to" and that therefore China's economic growth "isn't going to come from exports to the U.S.," said David Loevinger, Treasury's coordinator for the bilateral talks.

The United States would stress the need for both countries to do all they can to sustain their economic recoveries through maintaining their monetary and fiscal stimulus programs, he said.

But China needs to understand that the days of easy credit and a housing boom driving U.S. consumption were over, said Loevinger.

"It's not so simple as putting in place a big fiscal stimulus, a big monetary stimulus, to tide each economy over for a year or two, and then we can get back to the old days, where China was exporting into a consumption boom in the U.S.," he told a group of Asian-American business leaders in Washington.

China will "need to depend much more on home-grown growth ... particularly consumption-led growth," added Loevinger.

The United States also intended to discuss in the July 27-28 talks investment in China's service sector to help create jobs to soak up surplus rural labor, he said.

Washington would also repeat its recommendation that China adopt a more flexible exchange rate policy that would lead to a stronger Chinese currency, said Loevinger. (Reporting by Paul Eckert, Editing by Kenneth Barry)

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