US Secretary of the Treasury John Snow, touring the village of Mulan in Sichuan Province to promote "financial modernization," urged China on Thursday to take lessons from the US on how to spend more, borrow more and save less.
Snow argued that China's consumers and entrepreneurs are badly in need of financial sophistication offered by US banks and investment banks.
As he wandered through a thriving farmers' market and a traditional rural credit cooperative, Snow said that with better credit, Chinese families would be able to spend more money, buy more goods and perhaps reduce China's huge trade surplus with the US.
"Good credit facilitation and consumer finance is going to help consumers buy more things," Snow said. "We see consumerism and consumer credit as going directly to the thing we have most on our minds -- the global imbalances."
It has been an awkward lecture at times, given that China's economy is still growing at a blistering pace of 9 percent, is a huge magnet for foreign investors and is one of the US' biggest creditors.
China's savings rate is nearly 50 percent, one of the highest rates in the world. The savings rate in the US, by contrast, has sunk to less than zero in recent months and is one of the lowest rates in the world.
Chinese leaders have already told US officials in the last year that they needed to get their own house in order by reducing their fiscal budget deficits.
The Chinese leaders are also keenly aware of the debate within the US about the rising use of risky new types of home mortgages to finance homes that people would otherwise not be able to afford.
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