Asia's export dependency has to change

[FT_news]

Now that westerners are building up their savings, can Asian economies adjust to a world in which the US consumer is no longer the buyer of last resort?

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[forum_admin]

Economists are asking whether countries such as China will be able to reorient their economies so that domestic demand becomes the main driver of growth. “China should produce things for itself instead of acquiring sterile claims on the US,” says Paul Krugman, Nobel economist, referring to the $2,000bn (€1,430bn, £1,255bn) in foreign assets, including US Treasury bonds, accumulated by Beijing.

Since it liberalised its economy 30 years ago, China has produced a vast amount of real goods, only some of which have gone to improving the standard of living of its own people, he says.

The same was true in Japan, whose spectacular postwar growth was engineered by bureaucrats who prioritised the welfare of exporters – through currency, tax and environmental-standards policy – over that of consumers. The Japanese famously paid more for made-in-Japan goods than people buying them abroad.

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