> http://mpettis.com/2010/10/xin-fa’an-a-modest-proposal-to-resolve-the-com
> ing-trade-war/
>
> China will get the eight to ten years it desperately needs to engineer
> what will otherwise be a brutally difficult rebalancing. It will get a
> much higher return on its investment. And it can avoid the foolish
> pork-barrel domestic expenditures that have characterized the past
> several years.
Two qualifications. First, the scale of infrastructure investment would have to be enormous for this to work, i.e. the US would have to scrap its trillion dollar military-industrial complex. (I wish it would happen, but so many Americans have been so horribly corrupted by decades of Empire that it's not likely). Second, this isn't a G2, US-China problem. The entire semi-periphery is moving up the value chain very, very fast -- Russian nanotech, Brazilian renewables, Indian videogames are all on their way.
The only real long-term solution I can see is the BRICs developing their regional consumer markets. This will mean lots of inter-BRIC cooperation, currency controls, and maybe some sort of common semi-peripheral currency basket -- a mini-SDR, as it were, backed by the ruble, real, renminbi and rupee. We could call it the "rupal" or something. Use that to sponsor the global Green Deal the world urgently needs. Just thinking off the cuff here, I haven't thought deeply about this...
-- DRR