More than that, the economy has also weathered the energy price shock and the geo-political tumult that followed the Ukraine war. Its central bank appears to be close to bringing inflation under control, while its financial agencies have been able to resolve serious financial stresses like the collapse of regional banks such as Silicon Valley Bank earlier this year.
Until very recently, China’s surging economy made it the biggest trading partner for most Asian economies and China was seen as the critical driver of Asian growth. Blessed, it would seem, by a strong government that laid out clear and ambitious plans for the future, it was projected to overtake the US as the world’s largest economy in short order. The US, on the other hand, was perceived as a has-been for Asia, a stumbling giant which was unable to manage the Covid pandemic and which was riven with political and social crises of its own making.
What a difference a few months make. Today, it is China’s economy which is struggling with a multitude of challenges. Confidence in its future has ebbed as investors and businesses were disappointed by slow policy responses which fall short of what is needed to tackle deep structural weaknesses. The US, in contrast, has surprised even the most optimistic forecasters: its economy has been growing more or less in line with its potential — no mean feat given the effects of the harshest monetary tightening in 40 years.
