Will U.S. Recovery Go Global by Robert J. Samuelson

Washington Post, August 17, 2009 on page A13:

"Developing countries would seem to be the obvious replacement for American spending as the world's economic motor. International Monetary Fund (IMF) estimates China(11.4%),India about 5% and Brazil about 3%. These countries already account for nearly half of global economic output. By comparison, the United States is also a fifth about the same as Brazil.

The Economist magazine headlines:"Asia's Astonishing Rebound" Such information is the sequel to my comments in my blog dated August 16,09 re the article by Minxin PEI published by Foreign Policy magazine in July/August 2009. The following is the impact of lifestyle of the folks to save for emergencies. Economics is a behavioral science of observation with change and choice.

The large trade imbalances fundamentally stemmed from high saving rates. In 2008, China's saving rate was an astounding 54% of GDP, Hong Kong's 35% and Taiwan's 28% as reported by economist Eswar Prasad of Cornell University. The US saving rate, including both households and businesses was 12% of GDP."

Such data may be regarded as empirical evidence. Needless to say,consumers would buy Chinese products for good quality at less cost.

Samuelson further stated:"As US and European markets have weakened, Chinese exporters have shifted to emerging market countries, such as Brazil , Egypt and other nations in Asia.

Economist Nicholas Lardy of the Peterson Institue for International Economics is more optimistic. Now China is rebuilding the safety net. Since 2005, spending on health insurance, pensions and education has roughly doubled. Such policies are designed to serve the people in the 21st century. The Editorial on China in the Washington Post today also cited the new policy for online users including user-friendly way of the West. Globalization is the best avenue to communicate with folks, both in the East and the West, for better understanding of global peace and economic development.

The global economy is at a fateful juncture. Without the prop of American spending, the world needs a new basis for mutually beneficial growth. Without it, we may face protectionism, nationalism and economic strife."

Samuelson's conclusion is the gist of Sino-American Economics as I would envision and endorse for decades. I agree with his thoughtful and insightful analysis.

Francis Shieh a.k.a. Xie Shihao, a graduate student from China in 1947 to compare notes with others,to share knowledge with readers online and to seek wisdom in the long run.

Monday, August 17, 2009 at 9.52 a.m.