Stephen Roach: Don’t bet against ChinaGuru watch

published 9 June 2011

Morgan Stanley's Stephen Roach was one of the few people who warned of a US property bubble before it burst, and was rightly sceptical of the idea that Asia could decouple from the West. As far as China is concerned, however, he's among the optimists.

"Year in, year out, China has defied the naysayers," he says on Project-syndicate.org. Over 30 years of reform have "unlocked its economic dynamism". Its latest major move will be to shift from reliance on exports to the development of services and "a flourishing consumer society", underpinned by the construction of a "social safety net" to encourage spending rather than saving.

With Shanghai's 15-year-olds ranked first globally in maths and reading, China is "well on the way to a knowledge-based economy". That will also promote the move away from low-tech manufacturing to services and environmentally sustainable growth. Most importantly, adds Roach, while the West is "trapped in a dysfunctional political quagmire", "China has both the commitment and the wherewithal" to make major changes. "This is not a time to bet against China."