US and China are set in spending and saving habits

Alistair Darling has played host to the world&rsquo;s most important money men (and women) a few times already this year, most recently in his native Scotland, but he might be forgiven for feeling a bit envious as the world looks to where the really important decisions are being made this week: at the Singapore meeting of the Asia-Pacific Economic Co-Operation Group. <br /><br />President Barack Obama has time-tabled his Asia swing-tour to coincide with the meeting and grab some time with China&rsquo;s President Hu Jintao. What will they talk about?&nbsp; Not much, really, apart from the future of the global financial system and the free market economy.<br /><br />The two nations trade just shy of half a trillion dollars worth of stuff each year. But here&rsquo;s the rub: China sells about five times more stuff to the US than the Americans can pawn-off to the Chinese. This creates two &ldquo;major&rdquo; headaches: Firstly, China sits atop a mountain of US dollars (in the form of US Treasury bonds and actual greenbacks) that some suggest is worth more than $2 trillion. And those dollars are getting cheaper by the day as investors seek higher returns than the near-zero interest rates on offer from Ben Bernanke&rsquo;s Federal Reserve. China says the sliding greenback &ndash; and the corresponding rise in dollar-priced commodities like oil and gold &ndash; is a global concern the US must address.<br /><br />The US claims China&rsquo;s currency, the yuan, is artificially cheap thanks to the government&rsquo;s intervention making its exports unfairly attractive. <br /><br />For whatever reason, China&rsquo;s not prepared to let domestic demand dictate its growth. APEC members are feeling the same way: they&rsquo;re economies that know and understand exports, but aren&rsquo;t comfortable with domestic growth. So they keep their currencies cheap though the purchase of US Treasuries.<br /><br />This eases the burden of funding&nbsp; the United States&rsquo; near $1.7 trillion deficit, but it&rsquo;s bad news for the so-called &ldquo;global imbalances&rdquo; (a fancy term for the fact that Asian nations save and Western ones spend) that partially ignited the credit crisis.<br /><br />Changing those spending and saving habits could take a generation. Meanwhile, the imbalances grow larger, investors take cheap stimulus cash and buy higher-returning assets and commodity prices will continue to rise. Many wonder how long this can last before the next bubble busts. <br /><br />Maybe Mr. Darling is secretly relieved that he&rsquo;s back home dealing with bankers&rsquo; pay rather than refereeing a dispute of this magnitude. <br /><br />Martin Baccardax is On-Air Economics Editor at CNBC and co-host of Closing Bell and Europe Tonight