Nov 06
1
Chinese Economic Momentum
China and America. The engine of manufacturing and the engine of consumption.
How long can it last? Great article here that argues that China now has sufficient momentum to continue to grow and overtake all other economies including the US, in spite of a potential slowdown in the US….
Could Asia withstand a sharper
American slowdown? Hong Liang at Goldman Sachs estimates that
if America's G.D.P. growth drops to zero by the end of 2007 then
China's annual export growth could plummet from 26% in early
2006 to a decline of 2% by late 2007. After taking account of
the impact of slower export growth on imports and domestic demand
(i.e. slower growth in investment), Ms Liang estimates that China's
G.D.P. would still expand by 8%. That is significantly down from
this year's growth rate of over 10%.
China is today tightening policy
so as to slow down its runaway economy: weaker external demand
could be partly offset by reversing these measures.
In summary, if America suffers
a slump, the economies of China and the rest of Asia would slow,
but they are unlikely to be derailed. More importantly, the steady
shift of wealth to the East has moved to the point where it is
not only unstoppable, it can be self-sustaining. Therefore, the
East has moved from dependence on the West to independence from
the West, already!