An abiding belief held by many about the global economy is
that the East is one gigantic Foxconn-shaped, steroid-boosted
manufacturing facility, pumping out iPhones, shoes, clothing,
refrigerators, air-conditioners, and defective toys that its own
people could never afford. In this narrative, the only reason that
measured Eastern GDP shows any kind of life is because the Western
consumer steps into the breach to buy up these manufactures.
The confirming natural experiment would then be what was sure
to occur post-2008, when Western imports
collapsed. Here is what actually happened:
Top 10 contributions to
world growth: 2007-2012. GDP evaluated at market exchange rates
(Source: IMF World Economic Outlook, April 2012)
China became the single largest contributor to world economic
growth, adding to the global economy 3 times what the US did. Since
this chart shows GDP at market exchange rates, those who have long
argued China’s RMB is undervalued must be standing up now to say
that China’s real contribution is likely even larger.
Sure, China undertook a massive fiscal expansion
beginning November 2008. But, hey, everyone
In number two position among the contributors to global growth
is Japan. Yes, "Lost Decades" Japan helped stabilize the global
economy more than did the US. Among the other top 10 contributors
are the other BRIC economies, and Indonesia.
How is East Asian or emerging economy growth merely derivative
when they had nothing among Western economies from which to
Here’s the other interesting fact:
German exports to the rest
of the world (Source: IMF Direction of Trade Statistics,
This chart addresses the question: How has Germany remained a
successful export-oriented growing economy when its domestic demand
is weak, the Eurozone is buying hardly anything these days, and
German exports to the US have collapsed in the wake of the 2008
Global Financial Crisis? The chart shows that today Germany exports
30% more to Developing Asia than it does to the US. And this is not
just a China effect: German exports to China account for just
two-thirds of exports to Developing Asia overall. Also notice how
as late as 2005, German exports to the US were still double those
to Developing Asia.
The East grows only because the West consumes. Bitch
I'm on top of the world!