GEORGE TOWN: Asia-Pacific countries, especially China and India, are replacing the US as the main consumer of goods produced in the region, which will help sustain the region’s economic recovery, a leading economist said.
“China registered a trade deficit last month, which shows that it is importing more than it is exporting,” said Danny Quah, an economics professor at the London School of Economics & Political Science and a council member of Malaysia’s National Economic Advisory Council.
“For the first four months of 2009, Taiwan exports rose 50%, while exports to South Korea rose by some 14% in early 2009.”
“China and India are gradually displacing the US as the primary consumer of goods from Asia,” he told StarBiz after presenting a talk on Doing Research in Economics: In Times of Crisis & Otherwise at the Universiti Sains Malaysia School of Management here.
Quah said industrial production in Malaysia had started to turn around in May and June, boosting the levels of power consumption, which had now returned to pre-crisis levels.
“Those who are still cautious about the economic recovery are the ones who believe Asia’s economic health hinges on economic recuperation in the US,” he reckoned.
“But in 1991, China contributed to world economic growth three times at market exchange rates, while East and South-East Asia contributed nearly 20 times.
“In 2001, China contributed to world economic growth nearly one and a half times the US’ contribution, again at market exchange rates, and East and South-East Asia, nearly double,” he said.
The Shanghai stock market has continued to rise since China’s four trillion renminbi fiscal stimulus announcement last November, Quah noted, adding that “total bank loans in China rose 19% at the end of 2008 from the 12 months before, and continued their climb in January.”
“Malaysia’s financial system has only 0.3% of its banking capital exposed to the US subprime mortgage market, and profits remain high,” he said.
Quah also serves on the steering committee of the Abu Dhabi Economics Research Agency, as well as the editorial boards of East Asian Policy and the Journal of Global Policy.