Economy

China has promising growth prospects: economist

(Xinhua)
Updated: 2010-06-02 10:09

When asked what is behind the world imbalances, Quah said: "The direction of the causality I think is much more compelling from the behavior of the US economy to the rest of the world than it is from China to the US economy."

"The inability of the dollar to adjust the world imbalance contributes much to the financial crisis," he said.

"If you believe this alternative of this pattern of causality, then how we fix the problem of trade deficit imbalances is to fix the US economy," he added.

Quah said the US role in the world economy is no longer as optimistic as it was. Other parts of the global economy are actually growing faster and already having a much bigger role in the global economy. American consumers have to be more careful with their borrowing behaviors, he said.

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"When they do that, I would argue, a more rational attitude toward savings and consumption. That would restore the world pattern of global balances," he said. "We would need other things as well, but I think that is the single largest cause for global imbalances."

Quah said the "global economy's center of gravity," a quantified indicator showing the global distribution of economic activities, has been moving 2,000 km eastwards for the past three decades, indicating the increasing importance of the East in the world economy.

However, "it may take decades if not centuries to see a shift of leadership from the West to the East with the reconfiguration of political power and soft power paralleled with the economic power," he said.