What a difference six years makes. China’s Premier Li Keqiang lands in Davos this week, leading the most high-level Chinese delegation to the annual Swiss retreat since 2009. Those meetings took place as the U.S. economy was crashing and threatening to bring down the global economy. By contrast, just weeks earlier, Chinese leaders had unleashed a bold, $586 billion stimulus package to shore up growth. Grateful policymakers hailed the move — a rare bright spot amid the prevailing gloom.
This year, the positions are reversed. A Chinese slowdown is shaking confidence around the globe, while America’s strengths are more evident than ever. Today’s 7.7 percent plunge in Shanghai stocks — the biggest since 2008 — underscores how volatile conditions have grown on the mainland. Li had intended tomorrow’s speech on “The New Global Context” to reassure political and financial leaders that Beijing has matters under control. The job is getting harder by the day.
China could do worse than to study how the U.S. has recovered so quickly since 2009. President Barack Obama’s policies have drawn endless flak in Washington from both ends of the political spectrum. To the traditionally pragmatic Chinese, though, the results should be incontrovertible. With its strengthening dollar and 5.6 percent jobless rate, the U.S. is offsetting the increasing drag from China. Indeed, without the rebound in U.S. demand, the mainland economy itself would be worse off right now: In December, exports to the U.S. climbed 9.9 percent from a year earlier.
Read Full Article HERE