Home  Contact Us
  Follow Us On:
 
Search:
Advertising Advertising Free Newsletter Free E-Newsletter
Magazine
  
      2024       2023       2022       2021       2020       2019       2018       2017       2016       2015       2014       2013       2012       2011       2010       2009       2008

FEATURE STORY: GLOBAL ECONOMIC GRAVITY CENTER IS SHIFTING TO THE EAST
Share to

GLOBAL ECONOMIC GRAVITY CENTER IS SHIFTING TO THE EAST
By Morgan Brady

BT 201812 Feature 03全球经济重心正在向东方转移

自危机爆发以来,整整10年震撼了2008年之后的金融世界,并导致主要经济体在事后陷入衰退。

雷曼兄弟(Lehman Brothers)的破产是随后发生的一系列灾难性事件中的首次事件,这家投资银行的资产规模为6390亿美元,债务总额为6190亿美元。

导致许多其他银行倒闭以及人们失去抵押房屋。 事件始于美国,但它们也蔓延到其他国家,包括拉丁美洲和欧洲国家。 全球主要经济体进入了被称为严重衰退的时期。即使在危机爆发10年后的今天,由于各种原因,它们的增长水平也非常不可持续。

而中国等经济体的年增长率还是高于15%。 即使像新加坡这样的国家在2008年金融危机期间遭受了打击并因此而收缩,但在此后不久后又成功上升并实现了近20%的增长水平。 这些经济体不仅表现出显着的增长,而且还表现出对西方所不具备的经济冲击的高度抵御能力。

BT 201812 Feature 04It has been 10 years since the crisis that shook the financial world in 2008 and led major economies to recession afterwards. Collapse of Lehman brothers, an investment bank which was at the size of US$639 billion in assets and $619 billion in debt, marked the first event in a series of catastrophic events that followed. Those included the collapse of many other banks and people’s loss of their mortgaged homes. Events started in the American economy, but they spilled over to other countries including those in Latin America and Europe. Major global economies entered into what has been dubbed the great recession. Western economies contracted and struggled, and even today 10 years after the crisis, their levels of growth are highly unsustainable for a variety of reasons.
 

Eastern Economies Shift Gear

Western economies rose to the top from the beginning of the industrial revolution, and even before that with the agricultural revolution that preceded it. But recently, it seems that western economies are losing their economic power. They are stuck in a single digit growth (or even contracting sometimes), whereas economies like China have been growing at rates above 15% annually. Even countries like Singapore which took the hit during the financial crisis in 2008 and contracted as a result, managed to rise again and achieve levels of growth near 20% shortly after. Those economies are not only showing remarkable growth but also showing a high level of resilience against economic shocks not matched by their western counterparts.

BT 201812 Feature 01The Shift Is Faster Than Previously Thought

It seems that the economic gravity center is shifting to the east, and it is easily noticeable. What is remarkable, however, is the speed at which this is happening. A study conducted by the McKinsey Global Institute found that the economic gravity center is shifting to the east at a speed of 140 Kilometers per year. This is faster than previously thought, and it is driven by rapid urbanization, particularly in China, as the middle class expands, and more people move to the cities and stimulate even further growth. Moreover, China is becoming a hub for growth in other regions such as Hong Kong, and the ripple effect continues.
 

Other Asian countries like India are also showing remarkable growth due to many reasons, including an increase in agricultural production, increase in industrial output, tax reforms, ease of doing business, skilled workforce, and little or no corruption. Those factors have made India another important hub for growth and have enabled it to become one of the safe havens for investors.
 

Another study found that in 1980 the global economic gravity center was mid Atlantic, and the location moved east to Helsinki and Bucharest by 2008 due to the rise of China and other eastern economies. The world’s economic gravity center is expected to be somewhere between India and China by 2050, after extrapolating growth in over 700 locations on earth.
 

IHS Study Confirms the Trend

Other studies confirm the shift. One research conducted by IHS expected China to become the world’s largest economy by 2024, which is way earlier than other forecasts. The study expected the expenditure by Chinese customers to quadruple to US$11 trillion between 2013 and 2024. This rise in consumption and domestic demand will help boost local businesses and drive growth further. Investments are likely to follow more fluidly as well. As a result, China will become the world’s biggest economy in 2024, surpassing the US, in terms of nominal GDP. One confirmatory sign is that China is already the world’s biggest economy in terms of GDP measured by purchasing power parity (PPP), which removes the effects of inflation on measurement of growth.

BT 201812 Feature 02Chinese Consumers Are Driving Growth

This increase in spending of Chinese consumers is likely to have an impact on other economies as well, particularly those in the Asia pacific region. Impact is pronounced mostly in increased expenditure on tourism, which benefits recipient countries. For example, Thailand saw an increase of 68.6 percent in the number of visitors in 2013 as the country welcomed 4.7 million Chinese visitors. The ASEAN region also saw an increase in the number of Chinese tourists but not equal to that of Thailand. Furthermore, neighboring countries are seeing an increase in their number of exports to China, as demand from China for their products increases. Rate of exports growth in ASEAN countries is almost 20% during the last decade.
 

Final Thoughts

Shift of the global economic gravity center is on its way. Western economies are spending billions to stimulate their economies whereas Asian economies are enjoying two-digit growth rates. Even when China is considered to be growing slowly at a rate of above 6%, it is still way above the growth rate in the US which is at 4.1% (a rate celebrated by President Trump). Sound economic policies and large populations in Asia have contributed to this impressive economic performance. A shift in global economic gravity center and an increase of economic power of the east will entail stronger political power as well. This implies that over the next few decades and even centuries, eastern countries will be more involved in setting global governance frameworks and models. The hope is that this will lead to prosperous growth in the global economy.

    Subscription    |     Advertising    |     Contact Us    |
Address: Magnetic Plaza, Building A4, 6th Floor, Binshui Xi Dao.
Nankai District. 300381 TIANJIN. PR CHINA
Tel: +86 22 23917700
E-mail: webmaster@businesstianjin.com
Copyright 2024 BusinessTianjin.com. All rights reserved.