Monday, November 15, 2010
The Demographics of Globalisation
This article explores global interdependence and savings as it relates to the demographics of key economies. The author focuses specifically on China as the current source for global savings. As a middle-aged economy, China is a natural for high savings (which the US as a middle aged economy should also be, by the way). Young and aging economies traditionally tend to deficit spend. The concern is that China is slowly becoming an aging economy as its policies limit the number of new workers introduced. China's extensive growth strategy is already showing its limits. The author uses this to explain in part China's "seemingly selfish" currency manipulations as a self protection strategy as they face the limits of their demographics.
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2 comments:
One thing that I thought was interesting about the article was the credit the author gave to the tea party. I think one thing about the growth in the tea party that often gets overlooked is how it shows American's discontent with the current system. I don't think that the tea party can maintain the increase in popularity once things economically start to change...
This article does a pretty nice job of summing up what has been going in China. I think the government know that what they have been doing is not the most sustainable strategy in the long run. However, since exports make up such a large portion of their economy, we can expect the government to not loosen up its hold of the yuan anytime soon despite strong criticism from other countries.
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