In the past, a US recession has been synonymous with global slowdown, but not any more. Or at least do not expect China and the rest of the emerging economies to suffer the most, as has traditionally been the case.
It would be a first if the pain of any future slowdown were felt mostly in western Europe. But some economists are predicting this on the basis that Chinese exports will hold up better than Europe’s and because the China domestic market is now so strong as to be a growth engine in its own right. With other emerging markets such as Brazil selling more to China, they are also more independent of US fortunes than in the past.
Jung Ulrich, managing director and head of markets, China, at JPMorgan, says: “China is much less dependent on the US economy than smaller countries because it has 1.3 billion consumers of its own.” China’s trading partners have also become diversified. The EU was China’s largest partner in 2005, with the US second and Japan third.
The other big change coming in China is the type of growth. Under the new five-year plan the government has pledged to move from high growth to sustainable development and to keep five balances between: international and domestic; coast and inland; urban and rural; economy and society; man and nature. And when the two are in conflict (for example, man and nature), the weaker partner (nature) is supposed to triumph.
It is a bold statement coming out of a country that has so far accepted pollution as merely an inevitable price of growth.
