The Rising Influence of Rising Affluence

[ilpapa]

WSJ


WRAP: European purchasing managers indexes are up, China’s down. That bifurcation captures the shifting engines of growth in the global economy, as the second-biggest national economy’s investment and construction machines runs out of oomph while the U.S. and euro zone show the best signs yet of having put their crises behind them. In fact, it was great relief that the euro-zone data came in as strong as it did. Until then, Chinese data had sent waves of concern through global markets.

One important question is the opposite of one that existed two years ago: Is the recovery in the advanced economies strong enough to deliver enough spillover growth to China that it can avoid a hard landing? That depends as much on the shape of consumer demand in the U.S. and Europe as it does on how far China has traveled down the path of reorienting its economy away from exports. (MC)