A bigger but somewhat slower growing China of the future will contribute about as much to global demand as the smaller but faster growing China of before. This is arithmetic: An economy that is twice as big can grow by half as much and contribute the same to global demand. By the way, China today is more than twice as big as it was a decade ago. So, the good news is, even with slower growth, China will continue to be an engine of global output. Indeed, an even bigger engine than before.
Big challenges lie ahead for the emerging economies. To avoid serious social and political pressures, growth has to be not only rapid, but broad based and equitable, in the sense that if there are steep income increases for some accompanying rapid growth, they must be perceived as deserved by effort and job creation, and not due to exploitation of rents or political favours.
Neither China, nor any other country, has "unlimited financial resources." Finite resources are, in fact, the core principle of economics. When you tee up the problem that way, you risk missing the actual problem, which is a combination of state power and the savings imbalances noted above. As the authors note, it has long been the policy of China to suppress household consumption, virtually insuring both excess national savings (Pettis stresses that Chinese household savings are not unusually high) and wide-spread poverty (though they should have noted that there are at least internal noises in China pushing the other way -- we'll have to see what they amount to). Those national savings must flow somewhere, and flow they do, to countries across the globe that consume more than they produce.
BEIJING — China's economy faces "huge pressure" to slow further despite stimulus measures, Premier Wen Jiabao said Sunday, damping hopes for a q...