US vs China : who goes down first ?

Andy Xie :  One could describe the global economy as a race between US and China, to see who goes down first.

The global economy may be coming up for a breath of fresh air in 2011. Fiscal and monetary policies around the world have been highly stimulated for three years. The additional monetary and fiscal stimulus measures by the U.S. could generate an upside surprise to its 2011 growth rate. Most emerging economies continue to grow rapidly. By the middle of 2011, most analysts may declare that the world has finally put the financial crisis behind it.

The reality is quite different. The global economy is kept afloat by massive monetary and fiscal stimulus around the world. The main problem in the global economy — high costs and declining competitiveness in the developed world, and inflation plus asset bubbles in the developing world continue unabated. Either inflation in the developing world or unsustainable sovereign debt in the developed world will spark the next crisis.