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Here's how it could be possible:
Asian economies have recovered much better from the current economic downturn than many countries. Their industrial production has reached previous levels not seen since the global crisis hit. Less and less it seems to have been because of net exports and more because domestic demand fell. When a surge in food and energy prices occured, a tighter monetary policy curbed inflation but further squeezed the demand. The recovery has come from the ending of destocking by manufacturers and the large fiscal stimulus that most governments put forth.
However these are only temporary solutions. With exports forecasted to still be low in the near future, consumer consumption should become a forefront for the Asian economies.
In China, India, and Indonesia, not including government purchases, real spending was still at a rate of 9%. In this year up to May, car sales were up a whopping 47%. Despite early negative signs from Hong Kong, Singapore, and South Korea, spending looks to be on the rise. There has a been a general misconception about emerging Asian economies that they like to save rather than spend. That has not been the trend however in the past couple of years. If you compare Asian consumption to American consumer spending, Asian consumption has risen quickly.
Even with all these signs, China's government still doesn't like the fact that spending is only one-sixth of what the United States spends. Lately they have tried many different incentives to entice buyers to start spending those savings. Subsidies are given out for almost anything. Tax rates were cut on low-emission cars. They have even made it easier to borrow. In most Asian economies except for South Korea, household debt is less than 50% of GDP. So as you can see, they need and have the opportunity to borrow.
It will be very interesting to see if the Asian policymakers allow the exchange rates to rise. Not only would this increase the consumers real purchasing power, but it would also make firms want to produce more for their domestic market. Could we possibly see in the near future, Asians replacing Americans as a driver of global growth?
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