Global Economic Outlook: Bad and Worse
The Conference Board, a global research organization that analyzes world-wide economic data, today released its Global Economic Outlook for 2012. Among the study's key projections are that a) advanced economies--the US, EU-15, and Japan--are expected to show very anemic growth in 2012, have a slightly better showing from 2013 through 2016, then see a downturn in growth in 2017 through 2025; and more startlingly, that b) emerging economies led by China and India are expected to see a massive decline in growth over the coming decade.
Though he grants that "economic forecasts at this point are much less reliable than weather reports," Walter Russell Mead still believes that this is the most important story of the day.
[T]he main story here is that some of the best trained, and best connected economic minds in the business are changing their tune about China and India. The inexorable rise of the supergiants has been the dominant meme in the fashionable chit-chat about global economic and geopolitical trends for some time. The Conference Board report gives respectability and visibility to a more textured and, in Via Meadia’s view, more realistic view of what lies ahead.
The question shifts, Prof. Mead argues, to whether China can survive a massive economic slowdown.
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Apr '11
Re: Global Economic Outlook: Bad and Worse
I worked in Beijing in '08, and my wife and I are going there for a vacation on the Thanksgiving weekend. I loved being there, and found people hard working, polite, generous, and law abiding. When I think of China's future, though, I am often reminded of Claire Belinsky's writings on Turkey. Due to the inevitable problems in privatizing an economy with little pre-existing legitimate private capital, there are conspiracies everywhere, which makes people think in terms of conspiracies, which becomes a vicious circle.
Much of the joy of working in Beijing is that everyone is working in a better job than anyone in their family has ever had, whether you're an employee sleeping on a supermarket shop floor (while the store is open), or working as a bank clerk, life is relatively awesome. If they have a bad economic year, the government will go to heroic lengths to fix things, and harm hundreds of millions of lives. The victims will be angry, and lack avenues to be constructively critical. We're vacationing there in part because it's not clear how long today's Beijing is going to last.
Re: Global Economic Outlook: Bad and Worse
For years now, I have been arguing that China is vulnerable to what Tocqueville, with regard to the French Revolution, described as a revolution of rising expectations. If there is a downturn, the resentment of corruption on the part of the princelings descended from the old party elite will grow and grow. Occupy Beijing will make Occupy Wall Street look like the political stunt that it is.
Nov '11
Re: Global Economic Outlook: Bad and Worse
I think the answer to Prof. Mead's question is no, because the only reason that the Chinese government has been able to hold power at this point has been to drastically raise the lifestyles of a good number of people in the country. If the government falls however what can be done? Iraq had 25 million people when the we ousted their government (such as it was) in 2003. It took enormous efforts undertaken by the US to rebuild and improve the lives and infrastructure of the Iraqi people.
China has 1.3 billion people. Can anyone, or indeed everyone, put enough effort to help if a disintegration takes place?
Feb '11
Re: Global Economic Outlook: Bad and Worse
Europe and the U. S. are broke. China's growth rate depended largely on being able to export to the US which for a decade ran huge budget and balance of payments deficits. US and EU consumption served as an engine for China's growth, but that can not continue. China for a few years has been able to grow its economy through growth in internal consumption and decreasing its huge foreign currency reserves. That can only last so long. So the growth rate will come down.
While everyone predicts that it will undermine the Chinese government, I'm not so sure. The other tack the government can take is to blame it all on the foreigners and push militarism in much the same way Japan did in the teeth of the Great Depression. That is another possible outcome.
Dec '10
Re: Global Economic Outlook: Bad and Worse
Years ago I read a number, a number which is probably still representative, today: 25 million. Recollecting, here, that is the number of new jobs China must find for it's citizens, every year, just to break even with population growth. That compares to the US's need for some 2 million per year (134,000, per month).
It is that number that has influenced some American foreign and domestic policy, as the failure of China to achieve that figure has been considered to portend serious trouble in the Middle Kingdom, with a probable outcome of serious trouble for the rest of the world. Add to that that most of those not finding new jobs are young and male, well, the policy options available to that sort of government become rather obvious. China having a bit of a slowdown seems to fit with the world's predicament, until you consider the level of growth they need, just to avoid lashing out, or bursting into flames.
May '11
Re: Global Economic Outlook: Bad and Worse
OMG! If China has a major slowdown, who is going to loan us the trillions we need to keep our lifestyle as it is? What will happen to the 99%?
Jul '10
Re: Global Economic Outlook: Bad and Worse
Growth in the U.S. will increase? That on its face makes me doubt the whole enterprise.
May '10
Re: Global Economic Outlook: Bad and Worse
The talk of violent unrest in China reminds me of what the UK Independence Party has been saying for awhile about the European Union.
The reasoning goes something like this:
when people are denied self-determination and classical democratic freedoms,
AND
heavy-handed policies, ostensibly a necessary response to economic crisis, are rammed down their throats
THEN
violence is inevitable.
This lines up with other observers close to that situation, such as Ricochet's own James Delingpole.
Europe-scale violence and unrest are bad enough. China-scale violence and unrest, spilling outside her borders, is horrifying.
Feb '10
Re: Global Economic Outlook: Bad and Worse
China has wonderful people, a rich history and culture, great natural resources, and many more things in its favor. But it also has huge problems, many of which dwarf anything we face, due mostly to the sheer size of its population. There is also a lot of corruption, not to mention the demographic problems it will soon face as a result of trying too hard to overcome its population surplus. All told, I think the jury is still out on their becoming the next dominant world power.
Dec '10
Re: Global Economic Outlook: Bad and Worse
As dependent as we are on China doing well this scares me. Who will pay for our way of life if we can't borrow from the Chinese?
Sep '10
Re: Global Economic Outlook: Bad and Worse
It is difficult to know how real the numbers being reported out of China are and therefore difficult to know what the economic condition is at present, let alone what the future holds. This is not the case with India and therefore I think it is a mistake to link the two countries as is often done. With few exceptions, weekly leading economic indicators seem to be turning down and 12% unemployment and 2.5 T. deficits by spring are becoming more likely in the US and the rest of the world could be more severely affected. My guess is an authoritarian response in China. It is my understanding that recruitment is up for the military in China and this may be for use internally.
May '11
Re: Global Economic Outlook: Bad and Worse
Except for the tanks. Not that I would mind seeing some tanks in Oakland.