As the economic crisis, many analysts, apparently convinced of the opinion that an absolute truth, which for a moment was questioned once again proved its sanctity. Despite all the talk of a rupture relationships, the United States remains the center of the economic universe. The U.S. economy has led to a world economic recession, and now she is, apparently, intends to take it out of crisis - in spite of the monthly report on employment in the United States, which lost the job in April, even half a million Americans. By the end of last year, when consumer demand in the U.S. unexpectedly fell, and U.S. banks have stopped providing loans, other countries are in dire situations. A huge amount of consumer goods in the United States, of course, are not American-made products. If the American consumer demand for durable goods unexpectedly falls under attack caught the world's producers. That is why the fall in industrial production in Germany, Japan, Taiwan and South Korea in the last months of 2008 was so significant. Reducing U.S. demand is also the cause of the rapid reduction in the volume of international trade.
In addition, it is clear that before the credit crisis, the economies of many developing countries has been beneficial for soft lending conditions in the American and British banks. During the boom, banks can easily raise capital by increasing the ability to create a securitized assets and their subsequent sale to other financial institutions - pension funds and insurance companies. Part of funds raised in such a way impinge on the American real estate market. The remaining funds were given to companies and households in developing countries as a credit. For some time, the rise of developing economies are directly dependent on the ability of these countries to borrow in Western banks. Tightening credit conditions, however, eliminated this source of capital adequacy - that is why the country's so-B20 tended to increase the amount of funds available to the IMF. The IMF now plays the role of western banks. In other words, when the situation in the United States began to develop not according to plan, the same happened in all other countries. In fact, in many countries, the economic slowdown this year will be much deeper than in America. Perhaps they had no problems with the sub-lending, over-the soft conditions of bank loans or too greedy consumers. Nevertheless, from an economic standpoint, they became satellites of the United States.
In fact, it is very easy to believe in hundred percent approval. But the reality is rarely black and white. Yes, in the past few months, Japan was on the edge of economic abyss, partly due to excessive dependence on the United States. By the end of this year's growth the Japanese economy is likely to decline by more than six per cent. Meanwhile, in China things are much better. According to Hongbina Koo, chief economist for China at HSBC, the growth of Chinese economy this year may increase by more than seven percent, despite a significant decline in export production. A few months ago, many analysts believed that China would not be able to afford for themselves to survive the global economic crisis. He, more than any other country, dependent on U.S. demand. Products developed in the United States and owned by American companies, but most of the hard work done at the Chinese factories. Loyalty to these arguments, it is not sufficient either to confirm or refute. Clearly, the growth rate of China's economy declined sharply in the last quarter of last year, reflecting a significant drop in export production.
Nevertheless, China - this is a hard nut to crack, and he proved it during the world economic recession of 2001. And many analysts dropped from the accounts of the prospects for economic development in China, however, when the volume of exports declined, domestic economy has shown much better results than expected. The same can be said about the current situation. Now, when the main way to combat the credit crisis, recognized the expansion of fiscal policy, China is in a more advantageous position than many. With a large surplus of trade balance, which, in turn, points to an adequate level of domestic savings, the Government of China may raise capital to finance infrastructure projects. Many of these projects began before the crisis. Now, just move the dates of their completion at an earlier date, in order to stimulate demand in the next few quarters, rather than following, say, five years as previously planned. Meanwhile, despite the constant concern of Western analysts about the non-borrowing from Chinese banks for several years, circumstances have changed now.
On account of western banks of the huge volume of bad debts, and, ironically, the Government of Western countries adopt the Chinese model of state-managed credit. The key difference is that Chinese banks will never allow themselves to play games on securitization - the loans were financed mainly through the good old deposits, thereby reducing the risk of domestic credit crisis. This year the growth rate of China's economy would be impressive in comparison with other countries. Yet they will be significantly less than the targets that the country has shown a couple of years ago. At the beginning of this decade, the growth rate of China's economy is steadily expressed to two significant figures. Other countries, including India, have sought to imitate the Chinese economic miracle.
These years of exceptional success. The volume of China's economy is only a third of the U.S. economy (the share of consumer spending in the GDP of China is much more modest). Thus, if China does not increase the rate of economic growth, the country will not be able to offset the negative impact of the global economic downturn. Yet the economic flexibility in China is changing the nature of the current economic recession in the following two aspects. First, countries that produce commodities, which tend to have the most significant losses in periods of recession because of falling commodity prices, show slightly better results than usual. After the United States, China is the biggest consumer of many metals, and petroleum products. If it were not for China, the fall in commodity prices would be far more significant. Therefore, for the Middle East, Latin America, Australia and Canada, this factor has only a positive value. Secondly, for countries, frightened of its excessive dependence on the U.S. economy, China provides a good opportunity to reduce this dependence. If the Chinese economic cycle is not fully consistent with the economic cycle of the United States from other countries is absolutely reasonable to build economic relations with China in order to diversify risk.
Why should depend exclusively on the United States, especially if the United States will use all means in order to shift their economic problems to other countries (through the stimulation of domestic bank loans, the depreciation of the dollar, which foreign lenders perceive as a failure of United States of their obligations, government support for domestic industry expense of foreign competitors)? If the medium-term debt burden of private and public sectors will serve depressing factor for the U.S. economy, the desire of other countries to acquire reliable trading partners will grow significantly. China has already begun to prepare the ground for this process, entering into more long-term commercial transactions in their own currency rather than in dollars, which then letting the yuan can become an alternative to the U.S. dollar as reserve currency. And while many will be years before China takes a leading position in the global economy, we can already observe the first signs that America is beginning to lose its status as a major economic force in the world.
In addition, it is clear that before the credit crisis, the economies of many developing countries has been beneficial for soft lending conditions in the American and British banks. During the boom, banks can easily raise capital by increasing the ability to create a securitized assets and their subsequent sale to other financial institutions - pension funds and insurance companies. Part of funds raised in such a way impinge on the American real estate market. The remaining funds were given to companies and households in developing countries as a credit. For some time, the rise of developing economies are directly dependent on the ability of these countries to borrow in Western banks. Tightening credit conditions, however, eliminated this source of capital adequacy - that is why the country's so-B20 tended to increase the amount of funds available to the IMF. The IMF now plays the role of western banks. In other words, when the situation in the United States began to develop not according to plan, the same happened in all other countries. In fact, in many countries, the economic slowdown this year will be much deeper than in America. Perhaps they had no problems with the sub-lending, over-the soft conditions of bank loans or too greedy consumers. Nevertheless, from an economic standpoint, they became satellites of the United States.
In fact, it is very easy to believe in hundred percent approval. But the reality is rarely black and white. Yes, in the past few months, Japan was on the edge of economic abyss, partly due to excessive dependence on the United States. By the end of this year's growth the Japanese economy is likely to decline by more than six per cent. Meanwhile, in China things are much better. According to Hongbina Koo, chief economist for China at HSBC, the growth of Chinese economy this year may increase by more than seven percent, despite a significant decline in export production. A few months ago, many analysts believed that China would not be able to afford for themselves to survive the global economic crisis. He, more than any other country, dependent on U.S. demand. Products developed in the United States and owned by American companies, but most of the hard work done at the Chinese factories. Loyalty to these arguments, it is not sufficient either to confirm or refute. Clearly, the growth rate of China's economy declined sharply in the last quarter of last year, reflecting a significant drop in export production.
Nevertheless, China - this is a hard nut to crack, and he proved it during the world economic recession of 2001. And many analysts dropped from the accounts of the prospects for economic development in China, however, when the volume of exports declined, domestic economy has shown much better results than expected. The same can be said about the current situation. Now, when the main way to combat the credit crisis, recognized the expansion of fiscal policy, China is in a more advantageous position than many. With a large surplus of trade balance, which, in turn, points to an adequate level of domestic savings, the Government of China may raise capital to finance infrastructure projects. Many of these projects began before the crisis. Now, just move the dates of their completion at an earlier date, in order to stimulate demand in the next few quarters, rather than following, say, five years as previously planned. Meanwhile, despite the constant concern of Western analysts about the non-borrowing from Chinese banks for several years, circumstances have changed now.
On account of western banks of the huge volume of bad debts, and, ironically, the Government of Western countries adopt the Chinese model of state-managed credit. The key difference is that Chinese banks will never allow themselves to play games on securitization - the loans were financed mainly through the good old deposits, thereby reducing the risk of domestic credit crisis. This year the growth rate of China's economy would be impressive in comparison with other countries. Yet they will be significantly less than the targets that the country has shown a couple of years ago. At the beginning of this decade, the growth rate of China's economy is steadily expressed to two significant figures. Other countries, including India, have sought to imitate the Chinese economic miracle.
These years of exceptional success. The volume of China's economy is only a third of the U.S. economy (the share of consumer spending in the GDP of China is much more modest). Thus, if China does not increase the rate of economic growth, the country will not be able to offset the negative impact of the global economic downturn. Yet the economic flexibility in China is changing the nature of the current economic recession in the following two aspects. First, countries that produce commodities, which tend to have the most significant losses in periods of recession because of falling commodity prices, show slightly better results than usual. After the United States, China is the biggest consumer of many metals, and petroleum products. If it were not for China, the fall in commodity prices would be far more significant. Therefore, for the Middle East, Latin America, Australia and Canada, this factor has only a positive value. Secondly, for countries, frightened of its excessive dependence on the U.S. economy, China provides a good opportunity to reduce this dependence. If the Chinese economic cycle is not fully consistent with the economic cycle of the United States from other countries is absolutely reasonable to build economic relations with China in order to diversify risk.
Why should depend exclusively on the United States, especially if the United States will use all means in order to shift their economic problems to other countries (through the stimulation of domestic bank loans, the depreciation of the dollar, which foreign lenders perceive as a failure of United States of their obligations, government support for domestic industry expense of foreign competitors)? If the medium-term debt burden of private and public sectors will serve depressing factor for the U.S. economy, the desire of other countries to acquire reliable trading partners will grow significantly. China has already begun to prepare the ground for this process, entering into more long-term commercial transactions in their own currency rather than in dollars, which then letting the yuan can become an alternative to the U.S. dollar as reserve currency. And while many will be years before China takes a leading position in the global economy, we can already observe the first signs that America is beginning to lose its status as a major economic force in the world.
Stephen King,
HSBC
HSBC
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