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US-China meeting comes as China faces its own problems, too

With all the talk of debt and unemployment in the US, the US-China economic meeting this week seems to suggest an America in eclipse. The truth, however, is more complex.

By Staff writer / May 9, 2011

Vice President Joe Biden speaks during the opening session of the joint meeting of the US-China Strategic and Economic Dialogue Monday at the Interior Department in Washington.

Susan Walsh/AP

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A common refrain about the world's leading economic powers is that the US is sagging – overly indebted and maybe even in decline – while China's continuing rise is unstoppable.

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There are elements of truth to that theme, but as top officials from the US and China confer on their bilateral relations this week, it's also misleading.

America is no economic basket case. Its problems are real but not unsolvable. And China, for all its progress and potential, confronts some significant challenges of its own. For leaders in Beijing, those problems include tamping down high inflation, generating more growth in the domestic economy (as opposed to exports), and coping with rapid aging of its population.

"In this decade, China needs to address challenges like crony capitalism, aging population,... and environmental degradation," economists at Bank of America Merrill Lynch wrote in a forecast earlier this year. "China also needs to adjust to its new role as a global power."

Those aren't easy problems to address, and these issues are important context for understanding the meetings this week in Washington.

Set aside the cartoon caricatures, like the online animation that showed Chinese President Hu Jintao measuring the drapes in the Oval Office. The talks aren't all about a weakling US trying to placate the powerful landlord from Beijing.

Rather, this is about two important and powerful nations that have some differences, some common ground, and a long-term interest in having strong working relations between their governments.

A more nuanced story line

To be sure, in a future of stepped up competition from China and others, America appears unlikely to retain the kind of preeminence it has enjoyed in the global economy for much of the time since World War II. But the US still has considerable strengths, from world-leading universities to a well-honed tradition of entrepreneurship and innovation by businesses.

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