Global leaders have agreed reducing global imbalances is a priority. In practice, that means reducing the US $500bn current account deficit and shrinking the $350bn surplus of China. All other current account imbalances pale by comparison.
Since a current account surplus is the difference between a nation's savings and investment, that agreement means the US must raise its national saving to be less dependent on foreign funds. China must lift domestic spending to maintain high employment without producing so many exports.
Some progress is happening on both fronts. The US household savings rate has risen, driven by the need for US households to rebuild wealth. Corporate retained earnings have also begun to rise. But increasing private saving is not enough to raise US national saving if federal deficits remain high. The Obama administration must agree a budget that will reduce deficits in the years ahead.