The role of China in global recovery
Thursday, September 3, 2009 at 1:23AM ARTICLE: Asia's Recovery Highlights China's Ascendance, By NELSON D. SCHWARTZ, New York Times, August 23, 2009
Two key bits:
"The economic center of gravity has been shifting for some time, but this recession marks a turning point," said Neal Soss, chief economist for Credit Suisse in New York. "It's Asia that's lifting the world, rather than the U.S., and that's never happened before."
And . . .
"The big question is what happens next," said Kenneth S. Rogoff, a professor of economics at Harvard. "If the consumer in the United States and Europe doesn't come back, I'm not sure Asia has a Plan B."
So it's like everything has changed, but we're just not sure for how long.
But this seems more permanent, no matter how shaky China's recovery may end up being because it's so driven by public-sector investment:
The United States is also being shoved aside as the make-or-break customer for export-driven nations like Germany and Japan. China overtook the United States as Japan's leading trading partner in the first half of 2009, while in Europe manufacturers are looking east instead of west.
The overcapacity argument with China is real, but so is its burgeoning middle class. Booms and busts are expected, but so is the permanent desire for a better standard of living among all those hundreds of millions now armed with disposable cash.
The most compelling issue: how the Party keeps that middle class happy and free from fear about the future.
Reader Comments (1)
Would this be investment of public funds (however acquired) driven by (demands on/interests of) the public sector (1) to build up the country’s public services and public facilities? or (2) to spur and direct growth in capital and consumer goods production?, or (3) to build up both of these but more of (1), (2)?