China to edge past US in economic influence soon
Tuesday, 25 August 2009
From Fazle Rashid
NEW YORK, Aug 24: The economic centre of gravity has been shifting for sometime but this recession marks a turning point. It is Asia that is lifting the world rather than the US and that has never happened before, Neal Soss, Chief Economist of Credit Suisse, was quoted by the New York Times (NYT) as saying. Such a shift would have a significant remifications for the United States and rest of the world even after the global economic is back on track.
Predictions made by the economists that China would come back from behind to rival and finally edge past America in economic influence has started to bear fruits. Notwithstanding the fact that the US economy is three times the size of China, the economic resurgency point to the fact that
the long anticipated change of China leading the global economy could materialise sooner than anticipated.
The foremost reason for the economic surge in China is government's lending policy. Chinese banks doled as much as $1.0 trillion in loans in addition to $600 billion stimulus programme. China overtook the United States as Japan's leading trading partner in early part of this year and manufacturers in Europe are looking eastward, instead of west.
Robust demand among Chinese consumers has pushed the oil price to $70 a barrel. China will continue to buy American debt as Washington borrows heavily to finance its myriad stimulus and bailout plans. The government is actively considering revising upward its 10-year budget deficit projection by $2000 billion to about $9000 billion.
The world's central bankers are still in no mood to start raising interest rate anytime soon. 'There is no reason to reasses our monetary policy stance' is an unanimous view of the central banks governors who are heading home after attending the annual retreat hosted by the US Fed Reserve. Economic catastrophe has been averted but the road to recovery is likely to be bumpy and long, an analyst wrote talking to the central bank governors. Policy planners are even pushing back calls for early " exit strategies"
We have broken the fall, a prestigious English language daily quoted World Bank (WB) President Robert Zoellick as saying. The WB chief said emerging economies are performing strongly and generating demand that is supporting global stabilisation. "My real question is when does the private sector kick in and if not what happens," Zoellick has left this question for the policy planners to answer.
Another reason to fear a double-dip recession is that oil and food prices are now rising faster than economic fundamentals warrant and could be driven higher by excessive liquidity chasing assets. Global economy could not withstand another contractionary shock. If the governments decide to take fiscal deficits seriously and raise taxes, cut spending and mop up excess liquidity, it could undermine recovery and push the back the economy into stagflation (recession and deflation), an analyst warned.
NEW YORK, Aug 24: The economic centre of gravity has been shifting for sometime but this recession marks a turning point. It is Asia that is lifting the world rather than the US and that has never happened before, Neal Soss, Chief Economist of Credit Suisse, was quoted by the New York Times (NYT) as saying. Such a shift would have a significant remifications for the United States and rest of the world even after the global economic is back on track.
Predictions made by the economists that China would come back from behind to rival and finally edge past America in economic influence has started to bear fruits. Notwithstanding the fact that the US economy is three times the size of China, the economic resurgency point to the fact that
the long anticipated change of China leading the global economy could materialise sooner than anticipated.
The foremost reason for the economic surge in China is government's lending policy. Chinese banks doled as much as $1.0 trillion in loans in addition to $600 billion stimulus programme. China overtook the United States as Japan's leading trading partner in early part of this year and manufacturers in Europe are looking eastward, instead of west.
Robust demand among Chinese consumers has pushed the oil price to $70 a barrel. China will continue to buy American debt as Washington borrows heavily to finance its myriad stimulus and bailout plans. The government is actively considering revising upward its 10-year budget deficit projection by $2000 billion to about $9000 billion.
The world's central bankers are still in no mood to start raising interest rate anytime soon. 'There is no reason to reasses our monetary policy stance' is an unanimous view of the central banks governors who are heading home after attending the annual retreat hosted by the US Fed Reserve. Economic catastrophe has been averted but the road to recovery is likely to be bumpy and long, an analyst wrote talking to the central bank governors. Policy planners are even pushing back calls for early " exit strategies"
We have broken the fall, a prestigious English language daily quoted World Bank (WB) President Robert Zoellick as saying. The WB chief said emerging economies are performing strongly and generating demand that is supporting global stabilisation. "My real question is when does the private sector kick in and if not what happens," Zoellick has left this question for the policy planners to answer.
Another reason to fear a double-dip recession is that oil and food prices are now rising faster than economic fundamentals warrant and could be driven higher by excessive liquidity chasing assets. Global economy could not withstand another contractionary shock. If the governments decide to take fiscal deficits seriously and raise taxes, cut spending and mop up excess liquidity, it could undermine recovery and push the back the economy into stagflation (recession and deflation), an analyst warned.