Report of August 15, 2012
Abstract:
With China’s economic integration a new growth center capable of having a decisive influence on the global economy has emerged. Thus, strong increases in production in China could help to bolster the flagging economies of the industrialized world. This article will analyze the extent to which China already determines macroeconomic growth in the euro area and the US today. It considers the example of the Chinese economic stimulus program implemented during the financial crisis. The analysis shows that a growth spurt in China of at least three percentage points results in an acceleration in growth in the euro area of 0.3 percentage points in the first year and to 0.6 percentage points in the second year. The respective values for the US are 0.4 and 0.8 percentage points. As the effects are relatively modest, China cannot yet be described an engine for growth in the economic areas considered here. In reverse the effects are somewhat more pronounced. It can be expected that the debt crisis in the euro area will slow Chinese growth by up to one percentage point. From the Chinese perspective with growth rates of around nine percent, however, this impact is rather small.
The complete publication in German by Christian Dreger and Yanqun Zhang in: DIW Wochenbericht 33/2012 (PDF, 114.63 KB)