Asia's Export Dependency Has To Change

The article gives insightful ideas for Cambodia's policy makers. I agree with both scholars, but more with Huang than Kruman. Which model is best for Cambodia, the Chninese or VN?

While westerners are busily building up their depleted savings, can export-dependent Asian economies adjust to a world in which the US consumer is no longer the buyer of last resort?

Economists are asking whether countries such as China will be able to reorient their economies so that domestic demand becomes the main driver of growth.

Why is Chinese household consumption so low and what can be done to fix it?

Mr Krugman pins much of the blame on a threadbare social safety net, which has shrunk even as China has grown richer. Most Chinese build up precautionary savings at the expense of consumption, he says.

Erecting a safety net, however, may have only a marginal effect on spending, says Mr Huang. He pins the blame not on high savings but rather on declining incomes, especially in rural areas where 700m people still live. He advocates a push to increase rural incomes by legalising micro-finance, abolishing the city registration system that prevents migrant workers from receiving social benefits, and accelerating land reform.