It is time for Asian countries to encourage government spending, domestic investment, domestic consumption to increase GDP. Doing so also helps stablizing the world income and economy by helping other nations' export; which in turns will ultimately raise all countries' export . United we prosper; divided we falter. China alone has 2000 billions of dollars of foreign reserve
( compared with 70 billions for the US) to do that.
Asian countries are in an advantageous economic position. Proof is below:
Economists use purchase-power-parity adjusted GDP ( Not exchange-rated GDP or nominal GDP) as one realistic indicator to compare national economies. It is simply because a Big Mac (or cost of living for that matter) could cost, for instance, 3 times in NY compared with that in Beijing in a specific currency.
To truly compare three current (2008) largest national GDP, we need to look at several indicators:
Current 2008 Purchase-power-parity adjusted GDP (top 3 countries; in trillions of dollars): US 14 / China 8 / Japan 4.5
(https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html)
PPP GDP 2013 projection (in trillions of dollars): US 17 / China 14 / Japan 5
( http://en.wikipedia.org/wiki/List_of_countries_by_future_GDP_estimates_(PPP)
Current export (in billions): US 1377 / China 1465 / Japan 777
Current external debt ( in billions): US 12300 / China 400 / Japan 1500
Current foreign reserve ( in billions): US 70/ China 2033/ Japan 954
Stock of money ( in billions): US 1374 / China 2300 / Japan 4370
Current deficit (-) or surplus (+) (in billions): US -568 / China +368 / Japan +188
If we divide by a factor of billion; a more useful comparison goes like this:
The US currently earns $14,000 (projected $17,000 in 2013) and shortfalls $568 a year; owes $12,300; and has $1,374 in the bank
China earns $8,000 (projected $14,000 in 2013) and surpluses $368 a year; owes $400; and has $2,300 in bank
Japan earns $4,500 (projected $5,000 in 2013) and surpluses $188 a year; owes $1,500; and has $4,370 in the bank
It’s Really a Global Crisis
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Even then, we have no assurance of a vigorous recovery, because—at bottom—the economic crisis is global in scope. The old trading patterns simply won't work anymore. If China and other Asian nations try to export their way out of trouble, they're likely to be disappointed. Any import surge into the United States would weaken an incipient American recovery and possibly trigger a protectionist reaction. Down that path lies tit-for-tat economic nationalism that might harm everyone. Growing trade and investment barriers would shrink markets.
Indeed, if the rest of the world doesn't buy more from America, any U.S. recovery may be feeble. What's needed are policies that correct the underlying imbalances in spending and saving. As Americans save more of their incomes, Asians should save less and spend more, so that they rely more on satisfying their own wants to generate jobs and economic growth as opposed to exports. The great trade discrepancies would shrink. Americans would export more, import less; Asians would do the opposite.
But this sort of transformation requires basic political changes in Asia to complement changes in U.S. policies. Whether China and other Asian societies can make those changes is unclear. The implications are sobering. The success of Obama's policies lies, to a considerable extent, outside Obama's hands.
© 2009
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