Conferences at Asia House can always be relied on to shake up minds stuck in the rut of received wisdom and hackneyed sound bites. After gorging myself with no fewer than two (divine) cinnamon and apple pastries and several (large) cups of coffee, it soon became apparent that the Asia Risk Outlook 2012 conference would be no exception.
In the panel on market risk, Danny Quah, renowned professor of economics at the LSE, wielded some interesting myth-debunking wisdom. Two points that stood out were:
- People over-exaggerate the problem of over-investment in China and the growth of ‘ghost towns’. Consumption trends are actually looking very healthy. In the richer parts of China, consumption is actually growing at an annual rate of 15%
- The West can no longer be viewed simplistically as the keystone of the global economy. Germany – the only non-stagnating developed economy – has based its success on exports to Asia. It now exports 50% more to developing Asia than it does to the USA. Moreover, we should not underestimate the amount of de-coupling of Asia from developed economies: China now runs a trade deficit with 44 Asian IMF countries.