" ... Stock market turmoil triggered by fears of a US recession in the wake of a wide-scale mortgage crisis has ignited debate over whether Asia’s two rising economic stars are strong enough to power the world economy.
“What is occurring is the rise of other economies to balance out those of the US -- and that has to be a good thing”, said Chris Devonshire, a business consultant specializing on China and India trade.
China saw scorching expansion of 11.4 percent last year, closely followed by India’s 9.4 percent, and the prospects for both economies remain strong.
“We expect China and India to support regional growth in the event of a significant slowdown in the US”, said ING Barings Asia economist Prakash Sakpal.
Such a shakeup is significant because jobs and livelihoods are at stake, but also because, as financier George Soros wrote in London’s Financial Times, it could signal a major shift in economic power.
“The current financial crisis is less likely to cause a global recession than a radical realignment of the global economy, with a relative decline of the US and the rise of China and other countries in the developing world”.
But Zhang Ming, an economist at the Chinese Academy of Social Sciences, dismisses the notion that the Chinese and Indian economies are independent of US consumption.
“If you want to look at who is going to be the motor of global growth then you have to look at who provides the biggest market for the world’s production of goods. In the short run America is still strongest. China still has a long way to go.”
China, whose 3.4-trillion-dollar economy is about one-third derived from exports, could easily face economic difficulties if it were to lose the 2.5 growth percentage points garnered from trade, said Stephen Green, a Standard Chartered economist.
However, Indian exports represent only about 17 percent of its 1.1 trillion dollar gross domestic product, allowing it greater resiliency in the face of a US recession, analysts said. ... "
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