Why China Can’t and Won’t Save the World

Struggling economies often eye China and its $3.2 trillion in reserves for their rescue, and that’s unrealistic, argues Emily Kaiser, Asian economics correspondent in analysis for Reuters. China would have to triple its current rate of growth to offset a 3 percent drop in US and European growth, explains one economist. Increased stimulus spending could exacerbate inflation, inefficient spending, corruption and potential social unrest for China. “One of the most valuable contributions China could make to rebalance the global economy and lift growth is to let the tightly managed yuan currency rise more rapidly,” Kaiser writes. So far, China instead prioritizes combatting inflation and maintaining stability. China does depend on US and EU as markets, but releasing a flood of cash could exacerbate imbalances. The Chinese expect their government to invest in health care, technology, job creation, affordable housing and other Chinese needs, not those of the better-off US or EU. – YaleGlobal