4. Save More
You've now heard it so many times, you can probably repeat it in your sleep. President Obama will no doubt make the point publicly when he gets to Beijing: the Chinese need to spend more; they need to consume more; they need — believe it or not — to become more like Americans, for the sake of the global economy.

And it's all true. But the other side of that equation is that the U.S. needs to save more. For the moment, American households actually are doing so. After the personal-savings rate dipped to zero in 2005, the shock of the economic crisis last year prompted people to snap shut their wallets. Now that it's pouring, in other words, American households have decided to save for a rainy day. The savings rate is currently about 4% and has gone as high as 6% this year.

In China, the household-savings rate exceeds 20%. It is partly for straightforward policy reasons. As we've seen, wage earners are expected to care for not only their children but also their aging parents. And there is, to date, only the flimsiest of publicly funded health care and pension systems, which increases incentives for individuals to save while they are working. But China, like many other East Asian countries, is a society that has esteemed personal financial prudence for centuries. There is no chance that will change anytime soon, even if the government creates a better social safety net and successfully encourages greater consumer spending.

Why does the U.S. need to learn a little frugality? Because healthy savings rates, including government and business savings, are one of the surest indicators of a country's long-term financial health. High savings lead, over time, to increased investment, which in turn generates productivity gains, innovation and job growth. In short, savings are the seed corn of a good economic harvest.

The U.S. government thus needs to get in on the act as well. By running perennial deficits, it is dis-saving, even as households save more. Peter Orszag, Obama's Budget Director, recently called the U.S. budget deficits unsustainable — this year's is $1.4 trillion — and he's right. To date, the U.S. has seemed unable to have what Indiana Governor Mitch Daniels has called an "adult conversation" about the consequences of spending so much more than is taken in. That needs to change. And though Hu Jintao and the rest of the Chinese leadership aren't inclined to lecture visiting Presidents, he might gently hint that Beijing is getting a little nervous about the value of the dollar — which has fallen 15% since March, in large part because of increasing fears that America's debt load is becoming unmanageable.

That's what happens when you're the world's biggest creditor: you get to drop hints like that, which would be enough by themselves to create international economic havoc if they were ever leaked. (Every time any official in Beijing muses publicly about seeking an alternative to the U.S. dollar for the $2.1 trillion China holds in reserve, currency traders have a heart attack.) If Americans became a bit more like the Chinese — if they saved more and spent less, consistently over time — they wouldn't have to worry about all that.

5. Look over the Horizon
The energy that so many outsiders feel when they are in China and that President Obama may see when he is there comes not just from the frenetic activity that is visible everywhere. It comes also from a sense that it's harnessed to something bigger. The government isn't frantically building all this infrastructure just to create make-work jobs. And kids aren't studying themselves sleepless because it's a lot of fun. A few years ago, I interviewed Zhang Xin, a young man from a deeply poor agricultural province in central China. His parents were wheat farmers and lived in a tiny one-room house next to the fields. He had graduated from Tsinghua University — China's MIT — and gotten a job as a software engineer at Huawei, the Cisco of China. His success, Zhang told me one day, had changed his family forever. None of his descendants would "ever work in the wheat fields again. Not my children. Not their children. That life is over." (And neither would his parents. They moved to prosperous Shenzhen, just north of Hong Kong, soon after he started his new job.)

Multiply that young man's story by millions, and you get a sense of what a forward-looking country this once very backward society has become. A smart American who lived in China for years and who wants to avoid being identified publicly (perhaps because he'd be labeled a "panda hugger," the timeworn epithet tossed at anyone who has anything good to say about China) puts it this way: "China is striving to become what it has not yet become. It is upwardly mobile, consciously, avowedly and — as its track record continues to strengthen — proudly so."

Proudly so, because as Zhang understood, hard work today means a much better life decades from now for those who will inherit what he helped create. And if that sounds familiar to Americans — marooned, for the moment, in the deepest recession in 26 years — it should.

                                                                             By Bill Powell / shanghai Thursday, Nov. 12, 2009