Everybody's got to work together China and the U.S.

Aside from importing basic goods, China exports manufactured goods throughout the region.

This combined with the intervention in Vietnam set the stage for further French influence in China leading up to a sphere of influence over parts of Southern China.

Perhaps the Chinese should not worry.

China is responsible for the savings side, while the US disproportionately accounts for the consumption side, ultimately turning the Chinese into America s creditors.

Today, they pursue the same goal with the help mainly of China, but also of Iran, Venezuela, and occasionally India and Brazil.

China s growth currently relies on an undervalued currency and a huge trade surplus.

Yet a mix of political factors has led to stunning refusal by policymakers to confront China.

But China has re emerged a big hitter, along with India whose population will soon be bigger and younger than China s and Brazil. How do we cope with this growth of economic and political clout?

Chinese cynicism and spontaneous selfishness, however, is now tempered by what they perceive as growing recognition of their unique status.

The self confident side of the leadership s split personality is often what worries China s neighbors and the US alike.

With China s up or out system for senior leaders, those who are not promoted will be replaced.

The answer is not for China to step up its public relations effort.

These are laudable steps for China, given its poor record on transparency.

The US needed China s cooperation to demonstrate the effectiveness of Obama s new strategy of collaborative global leadership.

But the jailing of Liu also demonstrates in the starkest terms that China s neglect of human rights is flowing to the rest of world alongside the mass of Chinese goods.

Named Xifu at the time, it was one of the three great bastions of culture in southern China during the tenth century, along with Nanjing and Chengdu.

But China is still a very poor country, at barely one tenth the income level of the US. It has a huge reservoir of surplus labor in the countryside.

But China s stance lacks meaningful bite, because its leaders fail to recognize that they no longer need to succumb to their unruly neighbor s blackmail.

Spending by China s consumers has lagged behind the Chinese economy s overall rate of growth for many years.

Now is the time for China, the Philippines, Vietnam, other claimants, and the US to take action to begin to diminish these tensions.

Today, Malaysia s income is 7.8 times that of Ghana, more than five times that of Honduras, and more than 2.5 times that of Egypt. In the global growth league tables, Malaysia is in the top tier, along with China, Taiwan, South Korea, and Thailand.

China will most likely regard the cooperation agreement recently announced by the Japanese and Indian defense ministers as a response to US pressure.

After his return from China, he appears on the The Dick Cavett Show with John Lennon, which after describing his experience in China as best as he can, inspires Lennon to write the song Imagine .

These imbalances ultimately reflected the accumulation of excessive international liquidity by countries like the US, stemming from excessive savings by countries like China.

Along with Russia, China has backed Syria in the Security Council, and it was recently revealed that Iran helped Syria to defy international sanctions by providing a ship to transport oil from Syria to a state owned company in China.

The United States Defense Department views China s goal as being to build a series of military and diplomatic strategic bases a so called string of pearls along the major sea lanes from the South China Sea to the oil rich Middle East.

This would require politically difficult shifts in consumption and investment, with America increasing its savings and China increasing domestic consumption.

Without any credible commitments by America, how can Obama ask China to do more?

Some economies may sustain collateral damage from both sides of the war, because, in addition to the pressure coming from excess dollar liquidity, they may be confronted with tougher competition (domestically and in third markets) from China, so long as the renminbi remains quasi pegged to the dollar.

I fear that China s leaders and people will continue to feel a certain gnawing, inchoate sense of deficiency and incompleteness in their quest for global respect until they find the strength to begin addressing the crucial, but elusive, issue of making China an ethical, as well as an economic and military, power.

The fall in aggregate demand while potential aggregate supply has been rising because of overinvestment by China and other emerging markets will sharply reduce inflation.

This latest round of monetary tightening in China reflects the authorities growing concern over liquidity. In 2009, M2 money supply (a key indicator used to forecast inflation) increased by 27 year on year, and credit expanded by 34 .

Thus far, the US has tried to allow for this evolution by stressing two bright lines no independence for Taiwan and no use of force by China.

Nor is the administration likely to muster two thirds support in the Senate to support a post Kyoto Treaty without binding commitments from China and India.

The cooperation of China, now the world s largest exporter and US creditor, is essential for easing and encouraging the transition to this nirvana.

Opaque and unfair delineation and allocation of land rights in China, together with state monopolies and burdensome bureaucracies, create distortions that give rise to corruption and inequities.

But it would be a pity if China s leaders did not endorse this acknowledgement of Japanese guilt as a manifestation of Japan s willingness to repent.

Will China hold together? Even though a weak US response is the biggest risk on the economic side, what happens in China may well have deeper and more lasting consequences on the broader historical canvas.

China needs to avoid the pattern by which past neglect of the service sector creates a class of incumbents who use political means to maintain their position.

The rich countries, together with China and the Middle East oil exporters do indeed need to take bold steps to help out emerging markets, and the Fund has a useful role to play.

In China, where the asset side of the balance sheet is large, the strategy of shrinking it via privatization has been largely rejected, at least for now.

If an international agreement to protect the world s climate is to be reached, much greater action to reduce CO2 emissions will be needed on the part of the US, as well as binding commitments on China s part to reduce its carbon burden.

With China retaining its under valued currency policy, dollar depreciation can aggravate global deflationary forces. Yet a mix of political factors has led to stunning refusal by policymakers to confront China.

Their share of international responsibility was revealed at the recent summit contributions to the IMF of 43 billion by China, 10 billion by Brazil, Russia, and India, and 2 billion by South Africa.