China – Newest Global Growth Engine?

By Shlomo Maital

    source: Bloomberg

Once, when the world economy was in trouble, there was a locomotive to pull it out of stagnation – the US economy.  After World War II, when the rest of the world was destroyed, the US supplied purchasing power through its imports.  With frequent global recessions, again the US appetite for consumer goods supplied badly-needed demand for the world.

      Today?  With an incompetent xenophobic addled President (at least for the next 13 days, or 92 days until the Inauguration), and the pandemic worsening in the US in up to two-thirds of all states —  the United States is not the locomotive but in fact the quicksand.

       Enter China,  vilified by Trump, but arguably emerging fastest and strongest from the pandemic.  China’s quarterly GDP growth rate annualized, is nearly 5%….   and that means demand for imports, especially from the Asian ecosystem at which China is at the center.   China can be at least a regional locomotive, and the effects will spread more widely.

       Why has China’s economy done a “V-shaped” recovery, when the US recovery, and that of the EU,  are far more likely to be flat-bottomed U-shaped?  

       China’s local authorities have poured easy credit and infrastructure projects into the economy; lockdown has virtually ended, and when the virus rears its head, China rapidly tests millions of people, to gain control.  

        It is possible to admire China’s economic resilience, while fiercely criticizing its flawed civil rights.  Why cannot every nation learn from other nations, embracing the good, rejecting the bad?   

        Bloomberg News shows regularly how the US economy is lagging – and the conclusion is,  you cannot jumpstart an economy without gaining nearly-full control of the virus.  The failed US administration – not just the President, but the incompetent Cabinet and advisors he has appointed, including Dr. Atlas, who espouses ‘herd immunity’ and denigrates masks —  will go down in history as one that outdid Calvin Coolidge (1928-32) in failing to see what was clearly written on the wall.