U.S.-China cooperation to yield more integration
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The strong economic benefits resulting from cooperation between China and the United States will push the two countries toward more integration, a University of Chicago professor said.
"There is a lot of gain from trade between China and the United States," Luigi Zingales, an entrepreneurship and finance professor, told Xinhua in a recent interview.
Zingales pointed out that the economic situation is very different for the two countries.
He said China's economic growth has been fast, so the number one priority has been to not slow down the development process. The number two priority for China, the professor said, has been to give more utilities to consumers and additional spending power to workers.
Increasing the salaries of Chinese workers and distributing more profits to them is beneficial because they will consume and import more, the professor said.
Zingales suggested that creating some form of retirement benefits in China also could help workers consume more because it will make them feel more relaxed about the future and make it easier for them to buy goods.
On the other hand, the professor noted, the economic situation in America is very different than that in China because the U.S. has come from decades of over-consumption.
"They need to find things that they do best and export to China and other countries," Zingales said.
The professor said that it actually would be better for China to invest in American real assets and companies, rather than to buy government paper.
"It will have benefits for both countries," the professor said. "For China, it will get high return on their investment, and for the U.S., it will reduce the cost of capital and force the government to be more disciplined and borrow less."
Zingales also said that he thinks that giving lectures to other countries isn't the way for China and the U.S. to cooperate over their monetary policies.
He said Americans should be delighted that China wants to sell goods that are inexpensive and what the U.S. should do and can do is try to open up the Chinese market.
Zingales, who has been to China twice, most recently in May, said he was completely stunned by China's development.
"I was very impressed by the quality of the buildings throughout Beijing, Shanghai and Sichuan," the professor said. "They are very comparable to the best buildings in the western countries."
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