Ferguson: China helped US out of Great Recession
While President Donald Trump has criticized China for its trade actions, author Niall Ferguson told a Harvard audience last week that China helped the United States by not selling its U.S. bonds in the midst of the crisis.
“One of the main reasons another depression was avoided, Ferguson said, was the global component, namely the stimulus money the U.S. received from China,” The Harvard Gazette reported.
“If the U.S. had done everything it did and China had done nothing, things would have worked out very different,” he said. The alliance proved so pivotal that Ferguson termed it “Chinamerica,” a pun on “chimera,” since it was always a little mysterious.
“The relationship survived the crisis despite some pretty nasty rhetoric; we called them currency manipulators. But China didn’t sell their great accumulation of U.S. bonds.”
But Ferguson also said China may well be the source of the next global crisis.
“People have been predicting a China crisis on an annual basis for the past 15 to 20 years,” he said, and the decline of China-U.S. financial relations may prove the tipping point.
“The breakdown of Chinamerica is bad news for the biggest corporations in the world, and that’s what I am keeping an eye out for. The best-case scenario is that China’s growth rate steadily declines. In the worst case, there is a crisis. Either way, the outlook is a somewhat bleak one.”