CHINA WILL TAKE A GENERATION TO CATCH UP WITH THE WEST
George Magnus
The Times, November 30, 2009
When Barack Obama visited China recently to meet Hu Jintao, his opposite number, the symbolism was poignant.
The former presides over a battered economy that is the world’s largest debtor and in need of a significant re-boot, while the latter holds sway over an economic powerhouse, a geopolitical rival and America’s most important creditor, with $2,300 billion (£1,394 billion) in foreign exchange reserves, mostly in US dollar instruments.
However, the conviction that this was further evidence of a post-crisis acceleration in the struggle for global dominance has taken on feverish proportions. Like a fever, it is blurring sensibility and leading to muddled and dangerous thinking.
The crisis has left the United States (and Europe) to repair the damage to financial and fiscal systems, and trust in financial institutions and products.
It also marked the end of a 25-year-old economic growth cycle, based on credit, over-consumption and baby boomers. It will take a long time for a new model, based on high employment, innovation and low carbons, to emerge.
The scale and importance of this structural change should not be underestimated, though, if any nation can make the transition successfully, the US is the principal candidate.
The good news for China (and other emerging markets) is how quickly they have bounced back from the crisis — in some cases, stronger. To a significant extent, this is down to significant public policy stimulus, nowhere more so than in China, which is now implementing a stimulus programme of 13 per cent of GDP and having injected bank loans worth 30 per cent of GDP into the economy.
However, the dangers of excessive credit creation are self-evident — witness again, Dubai — and it would be dangerous for China to carry on, waiting for world exports to come back, as though the world had not changed. Structural change, specifically stronger emphasis on the rural economy and consumption, is also vital for China.
(...) [artículo aquí]
George Magnus
The Times, November 30, 2009
When Barack Obama visited China recently to meet Hu Jintao, his opposite number, the symbolism was poignant.
The former presides over a battered economy that is the world’s largest debtor and in need of a significant re-boot, while the latter holds sway over an economic powerhouse, a geopolitical rival and America’s most important creditor, with $2,300 billion (£1,394 billion) in foreign exchange reserves, mostly in US dollar instruments.
However, the conviction that this was further evidence of a post-crisis acceleration in the struggle for global dominance has taken on feverish proportions. Like a fever, it is blurring sensibility and leading to muddled and dangerous thinking.
The crisis has left the United States (and Europe) to repair the damage to financial and fiscal systems, and trust in financial institutions and products.
It also marked the end of a 25-year-old economic growth cycle, based on credit, over-consumption and baby boomers. It will take a long time for a new model, based on high employment, innovation and low carbons, to emerge.
The scale and importance of this structural change should not be underestimated, though, if any nation can make the transition successfully, the US is the principal candidate.
The good news for China (and other emerging markets) is how quickly they have bounced back from the crisis — in some cases, stronger. To a significant extent, this is down to significant public policy stimulus, nowhere more so than in China, which is now implementing a stimulus programme of 13 per cent of GDP and having injected bank loans worth 30 per cent of GDP into the economy.
However, the dangers of excessive credit creation are self-evident — witness again, Dubai — and it would be dangerous for China to carry on, waiting for world exports to come back, as though the world had not changed. Structural change, specifically stronger emphasis on the rural economy and consumption, is also vital for China.
(...) [artículo aquí]
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