A more sympathetic view of China came from respected economist and former Morgan Stanley Asia non-executive chairman Stephen Roach. Roach pointed out that between 2004 and 2006 the inflation-adjusted savings rate of American individuals, companies, and the government was only 1% on average, which was the lowest among developed countries. As the U.S. aspires to maintain economic growth despite low domestic savings, it must attract deposits and capital from foreign sources. According to Roach, an operating budget deficit and trade deficit are tools for attracting foreign capital. Based on Roach's argument; it would appear that the U.S.

itself needs to take steps to increase its domestic savings in order to reach an ultimate solution to its trade deficit with China. On the issue of RMB appreciation, we would argue that although the exchange rate can affect the price of goods traded, it is not responsible for creating the U.S. trade deficit. Any attempt to pressure China into allowing RMB appreciation does not help to resolve the problem and may, in fact, damage the interests of both countries.