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China and the US: Doom and Gloom, Profits and Hope




General Electric CEO Jeffrey Immelt at Asia Society's 2010 Awards Dinner in New York on Nov. 16, 2010. (Elsa Ruiz/Asia Society)

General Electric CEO Jeffrey Immelt at Asia Society's 2010 Awards Dinner in New York on Nov. 16, 2010. (Elsa Ruiz/Asia Society)

There's a lot of talk in the United States about being overtaken by a rising China. But is all the economic doom and gloom only on one side of the Pacific?

With the state visit to Washington of Chinese President Hu Jintao out of the way, two items in the news have struck my eye.

Firstly, Nobel Prize-winning economist Paul Krugman argues in the New York Times that while Beijing's controversial currency policies are indeed hurting the US and other economies, they are also in danger of severely damaging its own.

He contends that not letting the RMB rise in value is a "lose-lose proposition, simultaneously depressing employment here (in the US) and producing an over-heated inflation-prone economy in China itself."

Krugman warns that prices across the Middle Kingdom are rising a lot faster than official figures suggest. "It’s no wonder that the Chinese public is angry about inflation, and that China’s leaders want to stop it," he writes, even if it means resorting to state controls.   

Meanwhile, there's been some positive financial news for America's largest conglomerate, General Electric. It has posted an unexpectedly big profit jump in its latest quarterly earnings.

Jeffrey Immelt, the CEO of the blue-chip giant who was honored by Asia Society last year, says this portends better days for America. "We just think the (US) economy can get a little bit stronger every day," he told analysts.

Immelt's optimism is right on message. He's just been appointed by President Barack Obama as the head of the White House's new Economic Recovery Advisory Board—a high-powered body charged with finding ways to boost growth and create jobs.

Related link:
Jeffrey Immelt at Asia Society 2010 Awards Dinner

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