That should not be surprising in Washington Post coverage. Again, the point is simple. The United States committed itself to reducing its budget deficit and to increasing private saving. This is supposed to be offset by a commitment by China and other surplus countries to increase domestic consumption. However, there was no mention of any adjustment of currency values. In the absence of any change in currency values, increased domestic demand from China will have a trivial impact on the trade deficit and the U.S. economy. Last year, China imported $70 billion of goods and services from the United States. If China could quickly boost domestic demand by 20 percent (a huge increase), we should expect its imports from the U.S. to rise by about 20 percent, or $14 billion. This increase in exports to China is equal to less than 0.1 percent of GDP. It would have a trivial impact on the U.S. economy. If the G-20 did not talk about currency values, then they did not have a serious discussion of economic issues. This should have been the headline of any article reporting on the meetings.
--Dean Baker