China's Chance to Be Our Economic Savior by Dean Baker

[Better Believe It]

China's Chance to Be Our Economic Savior
The US is no longer capable of pulling the world out of economic crisis. Only China has the resources – if it chooses to use them
by Dean Baker
September 24, 2011

Can China save the world economy? That is a question that people should be asking as the other potential candidates withdraw from the race. At the moment, the economies of the United States, Europe and Japan are all suffering from weak growth or worse. The debt crisis of eurozone countries threatens another financial crisis that could lead to another plunge in output, not just in Europe but throughout the world.

Meanwhile, the actors who could, in principle, take steps to reverse this dismal course of events are largely paralyzed. The eurozone countries are struggling with efforts to form the necessary fiscal union to support their currency. This requires creating a new legal structure, while also confronting intense political opposition in Germany and other better-off countries that will be asked support the debt of the Greece and other struggling economies.

With the key actors in the wealthy countries either unwilling or unable to take the necessary steps to support the world economy, it is reasonable to ask whether China can fill the gap. Certainly, China has the ability to act as a backstop for the world economy, if it chooses to play this role.

If China were to take this path, it would provide enormous benefits to the world economy. The wealthy countries would have to acknowledge China's role as the leading economic force in the world. They would also have to acknowledge the errors of their boneheaded economic leadership that put them in a situation where they could not rescue their own economies.

Read the full article at:

http://www.guardian.co.uk/commentisfree/cifamerica/2011/sep/22/china-world-economic-saviour

[johnd83]

1. This idea is complete garbage

China has its own set of debt problems. They had a massive credit expansion over the last few years and are starting to have problems with inflation. They don't have the capacity to prop up Europe and the US.