December 21, 2012 (TSR) – HSBC Bank chief economist Stephen King said the world is moving away from an “old world” dominated by Europe, the U.S. and Japan, and to a “new world” led by China.
King said the world economy is increasingly led by China, and countries raising their exposure to China have outperformed those with low exposure to China, in his latest report “The Great Rotation” obtained by Xinhua on Thursday.
“China’s impact on the rest of the world in recent years has been revolutionary. No longer is it possible to understand the behavior of the global economy without acknowledging the gravitational pull of China,” he said.
The “new world” has dominated the global economy over the last decade, which led to re-acceleration of global growth, while contributions to global growth from the “old world” have shrivelled.
“A stronger China connection pays dividends.” King said, noting that countries like the Democratic People’s Republic of Korea, Malaysia and Singapore which significantly increased their export exposure to China in the last 10 years, had enjoyed a better-off growth, while the U.S., Germany, Britain had low export-to-China per GDP ratios.
King said China managed to shrug off external difficulties mainly caused by “old world” weakness in 2012, with more domestic infrastructure spending.
He expected China’s GDP to grow at 8.6 percent in 2013.
“Even if the Chinese economy is slowing, its impact on the global economy is paradoxically rising,” he noted.
The report also said the U.S. would reach some kind of constructive conclusion in the fiscal cliff talks, preventing the country from economic collapse at the beginning of 2013.
