Stephen Roach on the Next Asia

STEPHEN S. ROACH has been a thought leader on Wall Street for over thirty years. He is currently a member of the faculty of Yale University and Non-Executive Chairman of Morgan Stanley Asia. For the bulk of his career, he served as Morgan Stanley's chief economist, heading up a highly regarded team of economists around the world. His recent research on globalization, the emergence of China and India, trade policy, and the capital market implications of global imbalances has appeared widely in the international media and in testimony before the U.S. Congress. Prior to joining Morgan Stanley in 1982, he worked in senior capacities at Morgan Guaranty Trust Company and the Federal Reserve Board in Washington D.C. He holds a PhD in economics from New York University and was a research fellow at the Brookings Institution. He is currently recovering from chronic jet lag syndrome after having logged 1.2 million air miles during his recent three-year stint as Hong Kong–based Chairman of Morgan Stanley Asia.

Acknowledgments ix

Introduction xi

Chapter 1 A World in Crisis 1

A Subprime Outlook for the Global Economy

Save the Day

Coping with a Different Recession

Davos Diary: 2008

Double Bubble Trouble

Even When the Worst Is Over—Watch Out for Aftershocks

Pitfalls in a Postbubble World

Panic of 2008: Enough Scapegoating

Global Fix for a Global Crisis

Changing the Fed’s Policy Mandate

An Early Leadership Opportunity for Barack Obama

Dying of Consumption

Uncomfortable Truths about Our World after the Bubble

A Postbubble Global Business Cycle

America’s Japan Syndrome

Whither Capitalism?

After the Era of Excess

Same Old, Same Old

Depression Foil

Chapter 2 The Globalization Debate 89

Open Macro

The Battleground of Globalization

The Global Delta

Beggars Can’t Be Choosers

Perils of a Different Globalization

Bad Advice and a New Global Architecture

Doha Doesn’t Matter

Global Speed Trap

Hitting a BRIC Wall?

Global Comeback—First Japan, Now Germany

Labor versus Capital

Global Lessons

From Globalization to Localization

Unprepared for Globalization

The Currency Foil

The Shifting Mix of Global Saving

Chapter 3 Chinese Rebalancing 169

China’s Rebalancing Challenge

A Commodity-Lite China

Scale and the Chinese Policy Challenge

China’s Great Contradiction

Soft Landing Made in China?

The Great Chinese Profi ts Debate

China Goes for Quality

Heavy Lifting

Two Birds with One Stone

Unstable, Unbalanced, Uncoordinated, and Unsustainable

China’s Global Challenge

Consumer-Led Growth for China

China’s Macro Imperatives

Manchurian Paradox

Chapter 4 Pan-Asian Challenges 261

The Next Asia

Rebalancing Made in Japan?

From Beijing to Dubai

A Tale of Two Asias

Kim’s Boost to Globalization

Japan’s Missing Link

India on the Move

The Cranes of Dubai

Asian Decoupling Unlikely

The Korea Test

Asia’s Policy Trap

Complacency Asian Style

The End of the Beginning

Another Asian Wake-Up Call

India’s Virtuous Cycle

Risks of an Asian Relapse

Chapter 5 U.S.-China Tensions 327

A Slippery Slope

Past the Point of No Return

Debating U.S.-China Trade Policy

Who’s Subsidizing Whom?

Protectionist Threats—Then and Now

The Ghost of Reed Smoot

China’s Pace, America’s Angst

The Politics of Trade Frictions

A Wake-Up Call for the United States and China:

Stress Testing a Symbiotic Relationship

Afterword 395

Sources 403

About the Author 407

Index 409