The question of the US reaction to China's exchange rate policy continues to rumble in Davos, though the absence of the US policymakers makes the debate somewhat one-sided.

The response by Chen Siwei (former Vice Chairman of the People's Congress and now Chairman of the Global Council for the Future of China), to the remarks of US Treasury Secretary, Tim Geithner, about China's manipulation of the RMB exchange rate, can be translated as follows:

‘I don't quite understand why he had said these unwise words, may be just to get the approval from the Senate. What I know is that he is a smart guy. I just hope he will just talk the talk and walk the walk when he is officially in office”.

The sensitivity is understandably extreme.

As I remarked in yesterday's blog, domestic demand, rather than the exchange rate, is the real issue. The implication of my analysis, as I indicated yesterday, is that domestic demand needs to grow by at least 12 per cent a year in real terms.

A further implication is that, in current circumstances, it makes far more sense for China to have a target for the growth of domestic demand than for growth of GDP. This is an essential shift in policymaking.

It is agreed by informed observers I have spoken to here that the rate of growth of the Chinese economy in the last quarter of 2008 and first quarter of 2009 is not above 2 per cent. This is concealed in the 6.8 per cent year-on-year growth reported for the fourth quarter. Behind the collapse in growth is the weakness in exports (41 per cent of China's exports go to the US and Europe) and real estate investment. I was told by a very well-informed Chinese economist that the fiscal boost should still deliver 7 per cent growth this year. If so, that would be remarkable.

Unfortunately, this is the wrong sort of growth: more investment, in a country crying out for higher consumption; more heavy industry, in a country desperately in need of more jobs; more state enterprise, in a country needing more private enterprise and more capacity, in a country suffering from excess capacity. China could produce 600m tonnes of steel, for example, but needs only 400m.

What is needed is a big structural shift in the economy towards consumption. Unfortunately, household disposable income is less than 40 per cent of GDP. This makes the creation of a thriving mass consumer market impossible in the short term. If the Chinese government had a demand target, as I suggest, it might address this issue more forcefully.

Two other points might be added.

First, it is not good enough to argue that China's real exchange rate has remained roughly constant over many years (with significant fluctuations). A country with China's characteristics - very high growth of productivity in manufacturing indeed - should have a strongly appreciating real exchange rate

Second, I am not stating that the US should abjure action forever. The rebalancing must start soon. If China remains part of the problem, it may need to be prodded. I don't think the rest of the world can be infinitely patient on this point, however strongly Chinese officials may react.

There is a real risk of protection - maybe even an import surcharge. That was the threat from the US in 1971, when it forced appreciation of the yen and D-Mark. It could conceivably happen again. US officials should indeed cool it. But the Chinese should not assume that the issue will magically disappear if they protest enough. It will not do so.

美国对中国汇率政策的反应这一问题，在达沃斯(Davos)引发反响，尽管美国政策制定者的缺席，使相关辩论有些一面倒。

针对美国财长蒂姆·盖特纳(Tim Geithner)有关中国操纵人民币汇率的言论，中国全国人大常委会原副委员长成思危的回应可翻译如下：

“我不很明白为什么他会说这些不明智的话，也许他只是为了得到美国参议院的批准。就我所知，他是一个聪明人。我只希望，当他正式就任后，他会说归说，做归做。”

不难理解，这是极为敏感之事。

如我在博客中所指出的，国内支出，而非汇率，才是真正的问题。如我所称，这种分析意味着，中国国内支出至少需要每年增长12%（按实值计算）。

这还意味着，在当前情况下，对中国来说，与国内生产总值(GDP)增长指标相比，确立一个国内需求的增长指标会更有意义得多。这将是政策制定中的一个根本转变。

我在达沃斯交谈的知情观察家都相信，中国经济在2008年末季和2009年首季的增速不会超过2%。公布的第四季度6.8%同比增长，掩盖了这种情况。增长崩溃的背后是出口疲态（中国出口的41%流向美欧）和房地产投资萎缩。一位十分了解内情的中国经济学家告诉我，政府财政刺激今年仍应带来7%的增长。若果真如此，那将是了不起的。

不幸的是，这种增长的性质是错误的：更多投资，而国家迫切需要提高消费；更多重工业，而国家亟需增加就业；更大的国有企业比重，而国家需要更多民营企业；更大产能，而国家已经在遭受过剩产能之苦。比如，中国能够年产6亿吨钢材，但需求只有4亿吨。

中国经济需要发生重大的结构转变，向消费转移。不幸的是，家庭可支配收入还不到GDP的40%。这意味着在短期内不可能创建一个繁荣兴旺的庞大消费者市场。如果中国政府像我所提议的那样，确立一个需求指标，那么它也许能够更有力地应对这个问题。

还有两点需要补充一下：

首先，主张中国的实际汇率多年保持基本恒定（其间有大幅波动）是不够有说服力的。一个具有中国特色（制造业生产率增长很快）的国家，应当有强劲增值的实际汇率。

其次，我没有说美国应当永远不采取行动。恢复平衡的调整必须很快开始。如果中国仍是问题的一部分，外界也许需要“激”它一下。我不认为世界其它地方会在这一点上拥有无止尽的耐心，无论中国官员的反应有多么激烈。

保护主义的风险切实存在，美国也许甚至会出台进口附加税。1971年美国迫使日元和德国马克增值时，就是这么威胁的。可以想象这种情况再次发生。美国官员的确应该保持冷静。但中方也不应假定，只要他们足够激昂地提出抗议，问题就会神奇地消失。问题不会消失。