This paper addresses aspects of Asia’s and more particularly China’s future growth prospects vs. those of the US and by proxy the West. The US has until recently been through an unprecedented consumption and dissavings binge, and, since current account deficits by definition must equal domestic savings and investment imbalances, it was and is the twin deficit phenomenon of budget and trade deficits, that is the prime problem. China, by comparison, has accumulated substantial sovereign wealth funds, inter alia by containing domestic consumption which at 35% of GDP is one of the world’s lowest, and has and continuous to acquire foreign assets including mines in Australia. But China has also added significantly to its capital stock in the manufacturing and infrastructure sector and the question arises to what degree China constitutes a threat to the West in its ongoing development. We find that such fears are premature and unfounded given the current and foreseeable state of China’s economic status.
Key Words: Comparative Advantage; Total Factor Productivity; Capital/Output Ratio; Reciprocal Gain; Free Trade; Productivity Growth.
JEL Classification: F10; F11; F14
[1] [1] Dr. Herbert Lich is an occasional visiting professor at the Faculty of Business at Giessen-Friedberg University of Applied Sciences in Germany. He also holds current teaching appointments at Holmesglen Institute and Charles Sturt University in Australia and he has lectured at Wu-Han University in the PRC.