China can no longer behave like China, because the US intends to behave much more like China, according to Larry Summers, director of President Barack Obama's National Economic Council. There is widespread consensus that global account imbalances – in particular the large current account deficit of the US and the large Chinese current account surplus – contributed to the financial crisis of 2008-09 by adding to excess liquidity in US financial markets and encouraging the development of toxic financial products. There is even greater agreement on the need to rebalance world demand to support and sustain recovery. American households and businesses have to rebuild their balance sheets, which requires higher private savings and a lower current account deficit. This, in turn, means lower net US demand for goods and services, which should be compensated by higher demand elsewhere, requiring the rest of the world to have more imports net of exports.

In this debate the rest of the world is often taken to mean China. But neither the US deficit nor the Chinese surplus is, of course, determined bilaterally. China's current account surplus was $426bn in 2008 compared with a US deficit of $706bn. Both these current accounts – as with all others – were the sum of bilateral deficits and surpluses with all countries. Nonetheless, the Chinese surplus has been huge as a percentage of Chinese gross domestic product – close to 10 per cent – and large in absolute terms. It is reasonable to ask how it might be reduced to compensate for a decline in net demand from the US. The International Monetary Fund, however, currently expects the Chinese surplus to rise again, after a temporary decline, to $595bn in 2012.

Yet the focus on China has been excessive. While it certainly would be desirable for the Chinese surplus to decline, this cannot happen overnight without negative effects on Chinese growth. China can alter its growth model only over a number of years by gradually shifting more resources into non-tradable sectors away from exports and import substitutes, letting its real exchange rate appreciate. If China tried to do this too quickly, domestic supply-demand imbalances would lower the growth rate, with large excess capacity in tradable goods acting as a break on growth and employment because capital could not shift rapidly enough into non-tradable activities. Lower Chinese growth would not only be bad for China, but also for all countries exporting to China, as it would swamp the effects of a reduction in China's current account surplus. We should not forget that Chinese growth has been good for world growth.