USTR to Address China's High Savings Rate

In a joint statement issued by Henry M. Paulson, Jr., Secretary of the Treasury and Carlos M. Gutierrez, Secretary of Commerce, China was urged to take action against its soaring savings rate. Secretary Guierrez indicated that trade talks beginning next week in Beijing would focus on the imbalance in the savings rate between the two countries.

"In the United States, we encourage people to spend, spend, spend," noted the Secretary. "Personal retirement planning should be secondary to that five bedroom home and Lexus."

"The number of foreclosures in the past two years has jumped dramatically in the United States and that has given the Chinese an unfair trade advantage. Americans now have less money to invest in their businesses and Chinese industries have really taken advantage of the situation," noted presidential candidate Hillary Clinton speaking to a group of mortgage lenders in Alabama. "The average American is worried about his future for good reason," continued Senator Clinton. "If Chinese nationals continue to save at the present rate, it's a forgone conclusion they'll be able to care for themselves in their old age."

As John Micklethwait, editor of the Economist magazine, explains, "this means that fewer government resources will be needed to care for the elderly in China", a situation that Senator Clinton finds "unacceptable". "If given the opportunity to serve the American people as your President, I will not allow this inequity to continue unanswered."

Asked what measures she believes will likely impact the People's Republic of China, she replied "trade sanctions". "I don't believe a military response is appropriate at this point. I believe in dialog. But if dialog fails, I'm not afraid to consider a military solution."

"China and the U.S are complementary as China has an excessively high trade surplus, a high savings rate and insufficient domestic demand, while the U.S. has an excessively high trade deficit and unduly low savings rate, so both sides have to effectively adjust their polices to resolve the imbalance," said Zhou Xiaochuan, governor of the People's Bank of China (PBOC), China's central bank.