By John Kemp
(John Kemp is a Reuters market analyst. The views expressed are his own)
Some Excerpts from his article dated March 2020:
LONDON, March 5 (Reuters) - Most western policymakers and journalists view the world economy through a framework that is 10-15 years out of date, failing to account fully for the enormous shift in activity towards China and the rest of Asia.
Most economic commentators and policy analysts cling to a world view that puts the United States and the North Atlantic countries at the core of the global economy, with Latin America, Africa and Asia on the periphery.....
That might have been a useful representation of the global economy in the 1980s and early 1990s, but it has become increasingly inaccurate in the 2000s and 2010s.
Rather than economic and financial changes originating in the United States and Western Europe and radiating out to the periphery, shock transmission has become bi-directional.....
Most economic commentators and policy analysts cling to a world view that puts the United States and the North Atlantic countries at the core of the global economy, with Latin America, Africa and Asia on the periphery.....
That might have been a useful representation of the global economy in the 1980s and early 1990s, but it has become increasingly inaccurate in the 2000s and 2010s.
Rather than economic and financial changes originating in the United States and Western Europe and radiating out to the periphery, shock transmission has become bi-directional.....
Intuitively, in the 1980s and early 1990s, global economic activity was concentrated in North America and Western Europe, with outposts in Japan and the Asian Tigers (South Korea, Taiwan, Hong Kong and Singapore).
But since then, Asia’s economies, especially China, have grown much faster than their western counterparts, pulling the centre of gravity steadily deeper into the eastern hemisphere and Eurasia.....
China’s share of the global economy has quadrupled to 16% in 2018 from 4% in 2002, according to the International Air Transport Association (“Updated impact assessment of the novel coronavirus”, IATA, March 5)......
The trade war of 2018/19 demonstrated it was not possible to damage China without inflicting widespread collateral damage on other countries (“Trade war rebounds on the United States”, China, July 9, 2019).
Medium-sized economies with a high share of imports and exports in their gross domestic product, including Germany and South Korea, were hit especially hard as they became caught in the cross-fire......
China’s rapid urbanisation, industrialisation and emerging middle class have been the principal drivers of world economic growth in recent years (“China has replaced U.S. as locomotive of global economy”, Reuters, Nov. 5).
China accounted for 28% of all global output growth in 2013-2018, more than twice the share of the United States or India, and dwarfing other countries, according to data from the International Monetary Fund.
If China’s economic growth is to be restrained, somehow, it is not clear what would replace it as a driver of rising global incomes......
China’s economy is far larger than the Soviet Union’s and much more deeply integrated into the global economy as both a producer-exporter and consumer-importer.
For most countries in Europe, Latin America, Africa, the Middle East and Asia, prosperity depends on growing exports to China and maintaining good relations with the United States.
Forcing them to choose is forcing them to become poorer......
But since then, Asia’s economies, especially China, have grown much faster than their western counterparts, pulling the centre of gravity steadily deeper into the eastern hemisphere and Eurasia.....
China’s share of the global economy has quadrupled to 16% in 2018 from 4% in 2002, according to the International Air Transport Association (“Updated impact assessment of the novel coronavirus”, IATA, March 5)......
The trade war of 2018/19 demonstrated it was not possible to damage China without inflicting widespread collateral damage on other countries (“Trade war rebounds on the United States”, China, July 9, 2019).
Medium-sized economies with a high share of imports and exports in their gross domestic product, including Germany and South Korea, were hit especially hard as they became caught in the cross-fire......
China’s rapid urbanisation, industrialisation and emerging middle class have been the principal drivers of world economic growth in recent years (“China has replaced U.S. as locomotive of global economy”, Reuters, Nov. 5).
China accounted for 28% of all global output growth in 2013-2018, more than twice the share of the United States or India, and dwarfing other countries, according to data from the International Monetary Fund.
If China’s economic growth is to be restrained, somehow, it is not clear what would replace it as a driver of rising global incomes......
China’s economy is far larger than the Soviet Union’s and much more deeply integrated into the global economy as both a producer-exporter and consumer-importer.
For most countries in Europe, Latin America, Africa, the Middle East and Asia, prosperity depends on growing exports to China and maintaining good relations with the United States.
Forcing them to choose is forcing them to become poorer......
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Now I am not an economic expert or forecaster of what be ahead of us in the future, but if you read the excerpts that I posted, you can see that the US in no longer the main driver of the GLOBAL ECONOMY... it would appear that CHINA has a greater influence on the global economy than we first might have suspected and the rapid growth of the economy of INDIA will help shift the focus of the global economy from the WEST to the EAST...
And, while that might be very good for the rest of the world, it is certainly not good news for the United States of America and her economic future.
