China's growth is Western world's great export opportunity

"China to overtake the US" is the sort of forecast that keeps American politicians awake at night.

"China to overtake the US" is the sort of forecast that keeps American politicians awake at night.

So Friday's snapshot of the Chinese economy from the Organisation for Economic Co-operation and Development was hardly likely to slip beneath the radar.

The OECD expects the Chinese economy - at least by some measures - to rob the US of its crown as the world's biggest by 2016. After slowing to 7.8 per cent last year, the OECD expects the Chinese economy to expand 8.5 per cent this year and reach 8.9 per cent next.

Despite the challenge from India and Brazil, China remains the world's fastest-growing economy.

And there is plenty in the OECD's 161-page report to encourage the West.

China's reliance on exports to fuel its growth is declining, albeit slowly. Exports as a share of the economy fell between 2006 and last year, the OECD notes. That is partly because demand from cash-strapped Western shoppers for everything from trainers to flat-screen televisions has fallen due to their own feeble economic growth.

But the OECD also points out that spending by Chinese consumers is now playing a larger role in the economy.

Given the need for Europe and the US to reduce their reliance on a mix of consumer spending and asset bubbles for growth, the emergence of new consumers who may want Western products should be embraced.

The report also notes the steps that Beijing is taking to open up the country's financial sector as well as ensuring that bond and equity markets, rather than the government, provide a growing share of financing to the broader economy.

There is much in the report to cause concern. Protection of intellectual property rights, for example, remains uncertain, something that causes much more anxiety among US corporations than the simple fact of where each economy stands in the world pecking order.

No one cheers more loudly for the US than billionaire investor Warren Buffett. Yet, when asked about the threat from China, he simply tells US companies to regard it as an opportunity. That's a far more constructive approach than a baleful "we're all doomed".

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