The USA has just had its bad winter moment. Its first quarter 2011 GDP figures were disappointing, with the snow as the leading suspect. Parts of the USA had a savage winter with snow disrupting activity despite better preparation and mechanisation to handle it than in the UK.
Inflation is also on the rise in the USA. If you print enough extra dollars, and drive the value of the currency down enough, you will discover as the UK has done that things get dearer when you import. Japan has just had another debt warning, as the amounts she needs to borrow to repair the damage of the tsunami and earthquake mounts. At least Japan so far has borrowed the money the state needs from Japanese savers, leaving her less vulnerable than European countries that have a penchant for spending foreigners’ money.
There are plenty of critics around saying China is past her best and will encounter problems from here. The latest argument is that China now has an ageing population which will be less energetic and successful than the youngsters who have powered Chinese growth to date. I think these critics are a few years too early. They underestimate the driving force of seeking better living standards in a state without generous welfare benefits on western lines. There are still millions of people to come off the land and into better paid factory jobs, and many wage rises ahead for those already in the urban areas. The Chinese five year plan assumes a huge increase in living standards over the next plan period. It got off to a flying start with a 20% increase in the minimum wage this year. Under the last five year plan many Chinese got higher wages by making things the west wanted to buy on borrowed money. Over the next five years more and more Chinese will earn better money from making things their neighbours want to buy using hard earned money.
The west is still busy with Midle Eastern wars and wrestling with its huge debts. Meanwhile the emerging economies are still growing very strongly and showing every intention of working their way to much greater prosperity. If the west is serious about maintaining and improving its living standards and getting more people into jobs, it has to take this competition seriously. That requires western governments to become much more business friendly, to attract the jobs, capital and enterprise to western places, or merely to keep here what we already enjoy. It also requires having plenty of friends around the world who want to buy our goods and services.