China's Chance to Be Our Economic Savior

The US is no longer capable of pulling the world out of economic crisis. Only China has the resources – if it chooses to use them

by Dean Baker

Can China save the world economy? That is a question that people should be asking as the other potential candidates withdraw from the race. At the moment, the economies of the United States, Europe and Japan are all suffering from weak growth or worse. The debt crisis of eurozone countries threatens another financial crisis that could lead to another plunge in output, not just in Europe but throughout the world.

Meanwhile, the actors who could, in principle, take steps to reverse this dismal course of events are largely paralyzed. The eurozone countries are struggling with efforts to form the necessary fiscal union to support their currency. This requires creating a new legal structure, while also confronting intense political opposition in Germany and other better-off countries that will be asked support the debt of the Greece and other struggling economies.