皇冠体育app

In 2012 the world economy will continue to struggle with the international financial crisis. There will be recession in Europe, world trade was already declining in September and October, and international commodity prices are falling sharply - a sensitive indicator of the state of the world economy. The only unknown is the severity of the slowdown - in particular, will the US be pulled into recession or merely continue to grow slowly, and by how much will the large developing economies such as Brazil, India and Russia decelerate? 皇冠体育app's premier Wen Jiabao predicted that next year's international economic situation would be "complicated and tough."

Entering a difficult situation, it is necessary to aim for the greatest possible accuracy in assessing the position of 皇冠体育app in the global economy - this affects both the rest of the world and 皇冠体育app. Frequently repeated statistics, such as that 皇冠体育app's is the world's second largest economy, are insufficiently accurate to suffice for this. For reasons indicated below they underestimate the role of 皇冠体育app in the world economy's development and are not fine grained enough to accurately judge economic policy. Analysis shows 皇冠体育app will play a pivotal role in the world economy in 2012 - Goldman Sachs's Jim O' Neill, who coined the term BRIC, said in the Financial Times: "While the financial and business world continue to hang on every twist and turn in eurozone politics, I think the biggest issue for the world in 2012 will be...皇冠体育app."

The first reason for this is that 皇冠体育app's high growth rate results in its contribution to world economic expansion being much greater than its percentage of world GDP. In 2007, the last year before the international financial crisis, 皇冠体育app accounted for only 6.3 percent of world GDP. But in the following three years the world economy expanded by $7.2 trillion while 皇冠体育app’s economy grew by $2.4 trillion - i.e. 皇冠体育app accounted for 33 percent of world growth. In contrast, in 2007 the US accounted for 25.1 percent of world GDP, but in the next three years the US economy grew by only $0.6 trillion. Therefore in the last three years 皇冠体育app’s economy contributed four times as much to global growth as the US. The EU, to make a comparison, contracted by $0.7 trillion during the same period.

The second key factor is 皇冠体育app’s financial role. The key feature of this is not, as is sometimes supposed, 皇冠体育app’s $3 trillion foreign exchange reserves. These have been accumulated over a significant period and, because a large part is an emergency reserve, only a small amount can be utilized at any point. The key element is the finance 皇冠体育app generates each year for investment – i.e. its total company, household and government saving. In 2007 US total finance generated for investment was $2 trillion and 皇冠体育app’s was $1.8 trillion – that is, the US was slightly ahead of 皇冠体育app. By 2010, under the impact of their economies, different responses to the crisis, total finance available for investment in the US was $1.6 trillion and in 皇冠体育app $3.1 trillion – i.e. 皇冠体育app’s finance available for investment is now almost twice that in the US, a dramatic change in three years.

Turning to international trade, US imports have still not regained pre-financial crisis levels. Taking a three-month average, to avoid distortion by purely short-term fluctuations, up to the latest available data, for October, US imports were an annualized $17 billion lower than the pre-financial crisis peak level in July 2008. Therefore in the last three years the US market for exports has contracted. In contrast, compared to the pre-crisis peak in July 2008, 皇冠体育app’s imports from other countries have increased by an annualized $575 billion. 皇冠体育app therefore now plays a much greater role as a market for increases in exports than the US.

Finally is the structural position 皇冠体育app occupies in the changing pattern of the world economy. The Economist magazine recently emphasized that 2012 will see a fundamental change in the world economy: for the first time the majority of world imports will be by developing economies. In 2008-2010 low and middle income, i.e. developing, economies accounted for 78 percent of world economic growth.

皇冠体育app already carries out a majority of its trade with developing countries. In the three months ending in October, 54 percent of 皇冠体育app’s trade was with developing economies - 49 percent of exports and 60 percent of imports.

The rate of increase of 皇冠体育app’s trade with developing economies is also significantly stronger than with developed economies. Between July 2008 and October 2011 皇冠体育app’s exports to developed economies rose by an annualized $107 billion and its imports from them by $145 billion. With developing countries, 皇冠体育app’s exports rose by an annualized $143 billion and its imports by $204 billion. 皇冠体育app was the hub of a rapid expansion of trade by developing economies.

This trade situation is directly linked to the new technological position 皇冠体育app occupies in the world economy. A number of developing economies have passed from being merely suppliers of raw materials to exporting more technologically developed products – India’s success in software and Brazil’s in regional range aircraft are examples. But no other developing country has such a wide technological range of internationally traded products as 皇冠体育app. Such trade originated in low technology labor intensive industries, spread through a rapidly widening range of medium technology products such as excavators, domestic goods and personal computers, up to the higher technology telecommunications equipment of Huawei and other companies.

This capacity of 皇冠体育app to export across a wider range of the technology spectrum than any other economy creates its increasingly key position in world trade. 皇冠体育app exports low, medium and some high technology products to developed economies, while its exports are increasingly on a higher technology level from the point of view of developing economies. 皇冠体育app’s financial resources make it able to follow this widening range of exports with direct investment.

It is the combination of these features - the single biggest contributor to the increase in world GDP, the largest source of finance, the biggest potential increase in export markets for other economies - which results in 皇冠体育app’s impact on the world economy being much greater than its pure percentage of world GDP. To put it in technical economic terms, developments at the margin, that is contributions to change, must be considered as well as averages.

Concerning the issues that will dominate 2012, 皇冠体育app's economy by itself is not yet large enough to pull the developed economies out of recession - although it can play a potentially significant role in collaboration with others. But in relation not only to Asia but to a widening range of developing countries the growth of 皇冠体育app’s economy is crucial. As developing economies now contribute more to world economic growth than developed economies, this means that the success, or otherwise, of 皇冠体育app’s economy for the global economy will be pivotal in 2012.

When the Chinese government states that the most important contribution 皇冠体育app can make to the world economy is for its own economy to grow successfully they are not engaging in platitudes. They are articulating the truth.

John Ross is Visiting Professor at Antai College of Economics and Management, Shanghai Jiao Tong University. From 2000 to 2008, he was then London Mayor Ken Livingstone's Policy Director of Economic and Business Policy. The views expressed here do not necessarily reflect those of the 皇冠体育app Daily website.