Publication

This brief examines external imbalances in the global economy, most notably the unsustainable US deficit and China's huge external surplus. Instead of focusing on the bilateral approach, world leaders should broaden the debate to cover a wide range of interconnected issues in the world economy and in global trade. Deals and possible trade-offs are best negotiated in a wider multilateral forum, the author argues. Overall, he concludes, there is an opportunity for useful policy coordination which would simultaneously avoid exchange rate overshooting and enhance China's world status.