Who Has Bigger Problems China or the United States?

Now that Chinese President Hu Jintao has boosted our economy by offering up $45 billion in trade deals, let's take a closer look at the competition between the U.S. and China with the following quiz:

1) Which country has fractious politics and dueling interest groups that often make implementation of coherent policies difficult? China or the United States?

If you answered "Both," Congratulations! You're right. China often appears to be a monolith, but edicts from Beijing are often, shall we say, "modified" by the time they are implemented in the provinces. Or ignored. Also, China's Hu said he was not told the Chinese military was testing a new stealth fighter just as U.S. Secretary of Defense Robert Gates visited Beijing. Either Hu is lying or the Chinese military was sending a signal to Gates AND Hu. Sure it's not easy to make policy in the United States, as anyone watching the budget debate in Washington will tell you, but Chinese policy debates are, if anything, more fierce and byzantine than our own.

2) Faced with an aging population, this country finds itself unprepared for the retirement of an entire generation of workers.

Again, if you answered "Both," congratulations. And, again, if you said China has the bigger problem, you're right. China has no social security program and its one-child policy makes a looming wave of retirements more onerous.

3) This country is developing dangerous imbalances that threaten its economy and long-term prospects.

OK, you get it by now. The answer is both. China is in wasting huge amounts of money on empty buildings and inefficient investments. That huge pile of foreign reserves China sits upon is, in some ways, a throne of thorns. To keep that cash rolling in, China essentially depresses domestic demand and living standards. In the U.S., we are piling up government debts that can't be paid, at least not easily.

The point of this quiz is to show that China is not the inevitable juggernaut it often appears to be. The world's two largest economies are complex beasts and keeping them both in line is no easy task.

Source: http://www.pbs.org/nbr/blog/2011/01/who_has_bigger_problems_china.html

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