Coincidence, maybe

US slapped tariff on China.

The House of Representatives voted Wednesday to punish China for policies that unfairly favor its exports at the expense of the United States and other countries, the latest volley in what is developing as a global battle over jobs and commerce.

It's the very coincidence that the law has passed in the midst of Japan-China dispute over Senkaku Islands. The timing couldn't also be better when Japan intervened its currency markets to lower Yen and China appreciated Yuan. What a coincidence!

Asia Falling?

ADB says the growth rate of some Asian countries could almost halve in the next 20 years. I knew it today in FT. By the way, ADB doesn't cover Japan in its research. It doesn't matter anyway.

The reasoning behind it is very simple. Many Asian countries have accumulated fixed investment over the years, which is pulling them up to the economic hot spot in the world. But the contribution of productivity -measured in TFP- to economic growth is minuscule. So their aggrandizement will lose its momentum as the input stalls.

It's striking in two points. First, it looks like East Asian countries, namely China, South Korea, and Taiwan, would suffer more than other countries. Their growth rate would decrease from 9.4%, 6.3%, and 6.1% in 1981-2007 to 5.5%, 3.9%, and 3.1% in 2011 to 2030, respectively. Second, on the contrary, Pakistan and Philippines would accelerate the growth rate in the next 20 years.

I think the Asian growth model is most notable in East Asia. Invest in fixed assets and export the products to the West. But they seem to be destined to depressed domestic demand, low fertility rate, and paltry inflation rate, which depend themselves on external demand. The next 20 years would show us the end of Asia and the triumph of the West. We'll see.