(SINGAPORE) While just about everyone hails the rise of China as the new economic powerhouse, economist Norbert Walter maintains that America, for all its woes, will remain the global superpower in the decades ahead.
China may well be the 'locomotive' for now and even the next five years, 'but I don't buy into a longer-term future of China', says the former chief economist of Deutsche Bank Group. As far as the longer term is concerned, 'I'm a bull for the United States and for the US dollar', he declares, adding though that he's not too upbeat about the greenback's prospects over the next three years.
Since retiring at the end of 2009 from the German bank, where he had been chief economist since 1990, Professor Walter has continued to air his views on the global economy, consensual or controversial - only he's now doing it in the name of Walter & Daughters Consult, which got underway in Germany early this year after Christine and Jeanette, both economists themselves, left their jobs to join their father as his support crew.
In town on a barely 30-hour visit this week, Prof Walter spoke to BT after addressing a breakfast meeting of the Singaporean- German Chamber of Industry and Commerce on the euro and other key economic issues of the day.
He doesn't share the worries of those who point to risks in China's banking or property sectors, and has 'no doubt' that the Chinese economy will still clock about 10 per cent growth next year, he says, but remains unconvinced about its long-term might.
'So I'm not sceptical for the short term; I'm more sceptical than almost everybody on the medium and the long term on China,' he says. In his view, theirs is a demographic problem.
The social consequences of producing 'too many boys and too few girls' are 'unbelievable', says Prof Walter, who was last in China in April, in Shanghai. 'If you have a policy that moves a five-child family into a one-child, one-boy family within two generations, you end up with fat boys, not competitive and not willing to take up challenges.'
In any case, he reckons that China's economic growth 'will voluntarily be moved from 10 per cent to over-7 in the next few years to something like 5 per cent after 2020 in order to preserve the local environment'. China will become increasingly dependent on imports for agricultural and energy supplies, he says.
Meanwhile, the US will, despite its intractable fiscal problems, 'remain the No 1 power, even in the middle of the 21st century', he declares.
'They are the youngest among the Old World. And the Americans have a better constitution to deal with change; the Americans will prove that they are better at dealing with change than anybody else.'
As for talk about the eventual demise of the euro, Prof Walter says: 'The euro will stay, with pain.' But Europe's leaders, and particularly the European Commission, must eventually work towards some 'new form of political arrangements' for the EU, he says.
'I think that's the direction to go but it will be a very bumpy road, and it will not be a fast track,' he adds. Indeed, Europe's growth will 'not be impressive' in the near term, with a few countries mired in 'imbalances, like the US'.
But his own country Germany - which he describes as 'the little locomotive of Europe' - is seeing good growth and 'will be perfectly capable of pulling the small guys around us', he says, citing Austria, Belgium, the Netherlands and Switzerland.
Prof Walter also points to who he reckons could be 'potentially the stars of the next decade'.
In relative terms, he says, 'I'd suggest that those countries that are very strong in supplying energy and agricultural products will be promising countries as well'.
So 'Latin America will be something to watch, if they improve their governance and their infrastructure', he says, citing Brazil particularly, with a new leader in charge, as 'a very interesting case' that could exceed expectations.
Source: The Business Times Singapore