The Federal Reserve and the People’s Bank of China are on the same path to policy normalization, but for very different reasons, writes Stephen Roach.

Income disparity in China is among one of the many issues that could have been addressed at Sunnylands. However, as Michael Justin Lee points out, symbolism overshadowed substance at the first meeting of Presidents Xi and Obama.

China’s middle class is expected to grow to over 600 million people by 2022. Given the already well-established market for US automobiles in China, the growth of the Middle Kingdom’s middle class will only benefit the US auto industry.

From June 8-9, the China-U.S. summit in Sunnylands, California attracted world attention because President Xi and President Obama decided to exchange in-depth views on global, regional and bilateral issues such as climate change, cyber-security, Sino-U.S. military ties, etc. The two leaders also touched the bilateral economic and trade ties, which have long been considered an anchor of a stable and strong Sino-U.S. relationship.

China’s adjustment of its investment-income deficit for 2011 exposes flaws in economic growth, but hasn’t raised as much concern as it should. Two statistics account for China’s negative net investment-income, high return on foreign investment and China’s foreign assets are mostly US dollars. Without fundamental change, it is hard to imagine a sable Chinese economy in the long-term future.

Though facing a largely uncertain prospect for its economic recovery after the 2008 financial tsunami, the US has for five years worked strenuously to promote economic restructuring, lay out plans for developing new industries globally and shore up its potential competitiveness for future growth.

Too often, debate about the relationship between the state and the market casts them as opposing forces locked in a zero-sum struggle. But this simplistic approach quickly renders constructive discussion a casualty of the ideological battle between advocates of state and market capitalism.

Commenting on the recent US-China 2022 report, He Weiwen outlines how bilateral trade between China and the US is expected to grow over the next ten years and how this will be beneficial for both countries.

China’s successful transformation from a middle-income country to a modern, high-income country will depend largely on the reforms that the government undertakes over the next decade. But, because the most pressing reform – interest-rate liberalization – carries both risks and rewards, officials should be prudent in their approach.

US-China 2022 is a new report and series of events projecting the economic growth possible from the bilateral relationship over the next 10 years, and submits policy recommendations to both the United States and Chinese governments to maximize potential benefits.