ISTANBUL - SINCE the US consumer is no longer the main growth engine of the global economy, experts are looking at China but are sceptical the Asian giant can fill that huge role.
Before the crisis, the division of labour seemed simple. American households piled on debt to buy consumer products manufactured in China and around the world, driving up global growth.
In 2008, the United States, the world's biggest economy, consumed 13.2 per cent of global imports, according to the World Trade Organisation. The worst crisis since the Great Depression has restacked the deck.
'The responsibility for powering the global growth engine will fall on other countries, particularly those that relied on export-led growth,' said IMF managing director Dominique Strauss-Kahn. But, he warned, that 'making this transition will not be easy.'
The Chinese economy, clearly the country the IMF chief had in mind, is still far from operating at full throttle, despite Beijing's injection of some 4.0 trillion yuan (S$822 billion) into the economy over two years to stimulate growth and offset a drop in exports.
The Chinese, lacking a strong social safety net, save a lot as insurance against sickness, old age and other difficulties. -- AFP
Wed Oct 07, 2009 1:59 pm