China's leaders are deftly reining back the country's revved-up economy, whose growth rate - at 21/2 times that of the United States - is the fastest in the world. For a country that has averaged economic growth of 9.5 percent annually for the past 20 years, an acceptable ``soft landing'' means slowing to a 7 percent pace. Such a result now seems achievable, according to Gene Huang, chief economist and managing director of the FedEx Corp.'s Economic and Industry Analysis Group.
Huang, a member of the Blue Chip Consensus Panel whose forecasts direct the consensus economic opinion of the Federal Reserve, said ``China's leaders are smart.'' They don't implement Draconian, across-the-board austerity measures, but rather stagger their actions, such as tightening lending to house-building, car-buying consumers while increasing loans to the service sector. Such a strategy is more likely to result in the desired soft landing.
Slowing growth to much less than 7 percent a year would cause labor and unemployment problems in the nation of nearly 1.3 billion people, said Huang, who was born in China, immigrated to the United States 20 years ago, and now works at FedEx headquarters in Memphis, Tenn.
He noted that China's economy differs from that of other Asian countries in that it has a very high manufacturing component and is not purely export-oriented.
``China produces things, that's why it plays a big role globally,'' he said in an interview after his keynote speech July 29 at the World Trade Center Cleveland annual conference.
``The real news is the rate that China is importing goods from around the world. Last year, U.S. exports to China took a dramatic jump - nearly 29 percent in one year, which is good news for controlling the U.S. trade deficit.'' China's hefty appetite is even better for Japan, whose booming exports to the People's Republic accounted for one-third of Japan's gross domestic product growth in the past four quarters.
``China is now the No. 1 destination for Asian exports and has a trade deficit with Asian countries,'' he said.
Huang - who has a master's from Yale University, a Ph.D. from the University of Pennsylvania and a law degree from Fudan University in Shanghai, China - cited three key factors to China's future success. He said that with a nearly limitless labor supply and a technology base that now ``has been put into orbit,'' the country must continue to attract enough capital investment to keep growing. He thinks it will.
The former General Motors Corp. and Eaton Corp. executive said a balance must be struck in the United States between outsourcing and protectionism. At the same time, he suggests that people must adjust to the fact of global integration.
``Goods, assets and human capital are flowing back and forth across national borders easier and in greater numbers than ever before.'' He cited a McKinsey & Co. study that predicts that, by the year 2020, some 80 percent of the world's goods will be manufactured in a country different from where they are consumed - up from just 20 percent today.
That prompts Huang to predict that ``national borders will cease to be a barrier to trade, commerce and communications. ... Global commerce has become like a hub-and-spoke system. We are dependent on each other.'' And he thinks that's a good thing.
``It's not in anyone's interest,'' he said, ``to wage war with your trading partners.''