The Economic World is Changing
June 17th 2008 14:32
Did you notice lately that the economic world is changing?
Japan is not anymore the creditor to the world it used to be. It went into a recession in the 1990s, never reformed its banking industry and, though it is still an industrial power, in comparative terms it simply eclipsed.
The USA is still a heavy player in the world. Up until this decade every peak and through in the economic cycle of Australia matched the US economic cycle. But in 2001 we avoided a recession. Now we have links to other economies.
China and India are the upcoming economic powers. China has enormous reserves of foreign currency and is eager to invest abroad. It's eying Rio Tinto and BHP Billiton, which is no wonder. They buy so much iron ore and coal from these miners that they rather get a slice of their earnings and influence their policies.
In the future these two economies, India and China, will become even more important in worldwide trade. China is growing very fast, GDP growth of 8.5 per cent, and has a great surplus in its trade balance meaning that they certainly export a lot more than they import. No wonder how they do that, being able to pay peanuts for even very highly skilled labour such as engineering. But, obviously, they must have their other merits at work also, even though they must watch out for inflation which there is very high at around 10 per cent.
But, even though the US is getting some competition in the world economic affairs, you must not lose sense of reality and proportion: the US is still a $7.5 trillion economy; China and India combined are a mere $1.3 trillion.
Japan is not anymore the creditor to the world it used to be. It went into a recession in the 1990s, never reformed its banking industry and, though it is still an industrial power, in comparative terms it simply eclipsed.
The USA is still a heavy player in the world. Up until this decade every peak and through in the economic cycle of Australia matched the US economic cycle. But in 2001 we avoided a recession. Now we have links to other economies.
China and India are the upcoming economic powers. China has enormous reserves of foreign currency and is eager to invest abroad. It's eying Rio Tinto and BHP Billiton, which is no wonder. They buy so much iron ore and coal from these miners that they rather get a slice of their earnings and influence their policies.
In the future these two economies, India and China, will become even more important in worldwide trade. China is growing very fast, GDP growth of 8.5 per cent, and has a great surplus in its trade balance meaning that they certainly export a lot more than they import. No wonder how they do that, being able to pay peanuts for even very highly skilled labour such as engineering. But, obviously, they must have their other merits at work also, even though they must watch out for inflation which there is very high at around 10 per cent.
But, even though the US is getting some competition in the world economic affairs, you must not lose sense of reality and proportion: the US is still a $7.5 trillion economy; China and India combined are a mere $1.3 trillion.
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Comment by Janet Collins
The Social Critic
Janet Collins Blog