Same old same old: the danger of the United States and China going back to their old ways.

• Author: Rogoff, Kenneth

As the global economy stabilizes, there is a growing danger that the United States and China will slip back into their pre-crisis economic patterns, placing themselves and the rest of the world at risk. Despite Chinese official rhetoric about the need for a new global currency to replace the dollar, and U.S. lawmakers' flirtation with "Buy American" clauses (which scares everyone, not just the Chinese), no one will want to rock a boat that has almost capsized. So China continues to run a giant trade surplus, and the United States continues to spend and borrow.

Short-run stability certainly seems attractive right now. But if the U.S.-China trade and debt relationship merely picks up where it left off, what will prevent recurrence of the same unsustainable dynamic that we just witnessed? After all, huge U.S. foreign borrowing was clearly a key factor in creating the recent financial mess, while China's excessive reliance on export-driven growth has made it extraordinarily vulnerable to a sudden drop in global demand.

A giant fiscal stimulus in both countries has helped prevent further damage temporarily, but where is the needed change? Wouldn't it be better to accept more adjustment now in the form of slower post-crisis growth than to set ourselves up for an even bigger crash?

True, both the U.S. administration and China's leadership have made some sensible proposals for change. But is their heart in it? U.S. Treasury Secretary Timothy Geithner has floated a far-reaching overhaul of the financial system, and China's leaders are starting to take steps towards improving the country's social safety net.

Both of these measures should help a lot in bringing the U.S. and Chinese trade balances toward more sustainable levels. Greater financial regulation in the United States means consumers will not be able to borrow so easily to rack up huge mortgage and credit card debt. Chinese consumers, on the hand, might actually start spending more of their income if they can worry a bit less about saving for health care, their children's education, and their old-age retirement.

Nevertheless, there is cause for concern. As the world seems to emerge from its horrific financial crisis, it is human nature for complacency to set in, and the domestic politics of the U.S.-China trade and financial relationship are deeply rooted. One shudders to think what lessons the U.S. financial sector will draw if, after the multi-trillion dollar bailout, there are only...