US-China economic cooperation calls for political vision

The recent roller coaster rides of Chinese and US stock markets rattle investors, but should not dampen their enthusiasm in economic cooperation. Economists often label such downturns as "volatility," in which the economy is assumed to slow down but enjoy a safer and more sustainable growth. The current downturns, however, are so dramatic that they do not seem like a minor adjustment, causing concerns of the two largest economies' health.

In the United States, the past year has witnessed slow economic growth and unusually low inflation. Despite economic data suggesting US monetary policy is tight, many believe it simply too loose, including some Federal Reserve officials. That's why there is an ongoing debate on whether to make the policy even tighter by raising interest rates for the first time in six years. But if it were that loose, US economy should be more booming with rising inflation. The reality shows the opposite: US economy's growth and inflation have been low all these years.

On the other side of the Pacific, China's GDP has been mainly driven by government spending, rather than consumer spending, and the latter accounting for only 35 percent of its GDP, which is one of the lowest levels in the world. What's more, China's investment rate becomes very high, reaching almost half of GDP. The real concern is that China's investment productivity is meager. For decades, China has been attracting capital and taking advantage of ample labor resources to achieve high-speed economic growth, but not nearly good at fostering innovation and protecting environment. Now it begins to face grim environmental constraints and an acute shortage of skilled labor as it runs the second largest economy. A widening inequalities between rural and urban areas and other domestic issues could undermine the sustainability of China's economic advances.

Facing their unique challenges, the world's two largest economics have all the reasons to put full effort in their economic cooperation, which is almost certain to be at the top of the agenda when Chinese President Xi Jinping visits the United States this month. It makes little sense if they choose to do otherwise. Thus the benefits and necessity of such a cooperation are self-evident, which is fully grasped by policy makers in the two countries.

Now the key is how to make the cooperation more efficient and sustainable, which has never been so closely watched by the international community than today. It is, indeed, the most important bilateral relation in the world, which, at the same time, faces new challenges. To the world, it has become clear that almost every world's problem becomes easier to solve if the US-China relationship is on solid footing.

The recent history demonstrates that the two countries could collaborate well on a growing array of hot-button international issues, such as anti-terrorism drive, global warming, Iran's nuclear program, the North Korea issue, and global pandemics such as Ebola. But more work is needed to improve the bilateral political and economic ties. Serious effort has been made to address sizable gaps between the two countries over a host of major issues concerning the bilateral ties, including human rights records, cyber espionage, business regulation and trade surplus.