China will be continue to be the driving growth behind global GDP, however its role in the world financial system will either push it into a second Golden Age or in fact implode like the Western financial crisis of recent years, says Dr. Linda Yueh, Fellow in Economics, University of Oxford & Visiting Professor at the London Business School.
The world economy is potentially entering a second Golden Age, driven by emerging markets and led by China, said Yueh at the GAIM 2011 conference in Monaco. However, I also see uncertainties and some issues we all have to contend with. There is quite a lot of uncertainty in the global economic landscape. First of all, the financial crisis is still with us and it is worth pointing out that this is not a normal recession, as with a normal recession there is a bounce-back. In the US after the early 1980s recession, the country grew by 8% but at the moment we are stagnating. Emerging market growth is helping push global recovery / GDP however it also brings volatility.
In her geopolitical address at GAIM 2011, China economy expert Yueh said that while she remains bullish on China, there are aspects to the region that have to be taken into precaution.
China can serve as an engine to global growth, but there are a number of cautions, said Yueh. It can serve as an engine but in a limited sense as the consumption base is poorer, there are master access restrictions, institutional instability and inflationary risk. There is a also a difficult mix of economic policies, including fiscal, monetary and exchange rate policies.
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