January 30, 2008
Asia was a hot topic. The consensus was that the Asian economy is not decoupled from the U.S. economy. A U.S. recession will take Asia with it — at least for the next five years. There is $9 trillion of consumer spending in the U.S. per year, and only $1.6 trillion in “Chindia” — China and India. If the U.S. consumer stops spending, Chindia can’t make up the difference. Big debates about whether China can pass the EU or U.S. in GDP over the next 25 years without political reform. A lot of the hard-bitten economists and business people say that China will “muddle through.” Pei Minxin of the Carnegie Foundation said that without political change, the Chinese people cannot see the future. He called China’s expansion “authoritarian growth” or “high-speed, low-quality growth.” In his opinion, political change is inevitable. But the Chinese government watched the clumsy Soviet Union to Russia transition and doesn’t want to make the same mistakes.
The wane in U.S. power and influence was a subtext of the proceedings. If the U.S. economy was truly de-coupled from the rest of the world, you get the impression that no one at Davos would be talking about America –they’d be focused on the fast growing India, China, Korea, et al economies.