Afloat on a Chinese tide

That the idea has currency at all reflects a remarkable transformation in itself. During the East Asian financial crash of the late 1990s,many in the region blamed China as a proximate cause of the debacle. Its emergence as a big competitor,the argument went,stalled the rapid export growth on which countries such as Thailand had come to depend,poking large holes in their current accounts,and precipitated the collapse of confidence.

Since then,and especially since the surge that followed its accession to the WTO in 2001,Chinas economic clout has grown as fast or faster in its own region as anywhere. And with East Asia,unlike with Europe and America,China tends to run trade deficits. It is now the biggest trading partner for both Australia and India. It is the biggest export market for Japan,South Korea and Taiwan; the second-biggest for Malaysia and Thailand; the third-biggest for Indonesia and the Philippines,and so on.

Everyone is waking up to the potential of the Chinese market. Indian poultry farmers have learned that once-discarded chickens feet can actually be sold. Hoteliers in Bali grapple with night-classes in Mandarin.

Still,few are yet confident in the golden age. Peoples Daily used the term in reporting the views of many taking part in the Sixth Beijing-Tokyo Forum in Tokyo. It seems unlikely the many included the Japanese contingent. The economic news at home was worrying though it would have been grimmer still were it not for the healthy growth in recent years in exports to China. In this context,the report read rather like a young sports champion consoling the veteran whom he has just bested.

Even in much of young,vigorous developing Asia the boom seems too precarious for triumphalism. One reason for this is statistical. Growth figures in parts of Asia have been so spectacularly good partly because they were so spectacularly bad in the first half of 2009. Singapores extraordinary first-half GDP growth of 17.9 per cent looks slightly less otherworldly against last years first-half contraction of 5.3 per cent. In the depth of the crisis,as trade for a while seized up,the region,as one of the most trade-dependent in the world,saw growth plummet.

That trade dependence is another reason for sobriety. Outside of China and India (which this week reported 8.8 per cent second-quarter growth compared with a year earlier),developing Asia remains heavily dependent on external demand. And despite the heady growth of sales to China,the most important sources of demand remain the G3 of America,Europe and Japan.

Asian exports to China fall broadly into three categories. Industrialised countries,notably Japan and South Korea,have found a big market for capital goods. Countries such as Australia and Indonesia have fed Chinas growing appetite for commodities and raw materials such as coal,iron ore and palm oil. But many Asian exporters have been selling components,as part of globalised supply chains in which made in China often means assembled in China from bits produced all over the place.

It is hard to work out from published trade figures where components imported to China from,say,Malaysia,end up. But Malaysian officials believe that some 60 per cent of their exports to China are destined for the G3. (By contrast,less than 30 per cent of Indonesias exports to China are re-exported.) A recent study of such global production sharing in East Asia by the Asian Development Bank (ADB) concluded that it has played a pivotal role in the regions dynamism and growing interdependence. But it has not lessened the regions dependence on the global economy.

Other studies have also found that China has already had quite a big positive impact on growth in other countries in the region. Besides providing an export market,it is a source of tourists,investment opportunities and demand for services. And,less measurably,it is a source of economic optimism: a boost to consumer and business sentiment.

Not quite the rising tide that lifts all boats

Its economy,however,for all its three-decades-long boom,still only accounts for 8 per cent of global GDP in current dollars; domestic private consumption,though growing fast,remains a small part of national GDP by global standards (36 per cent). This will grow as China reforms its economy to give a bigger share to household income,for example by lifting wages for Chinas factory workers. On August 29 Wen Jiabao,Chinas prime minister,must have enjoyed lecturing Japanese visitors on the need to tackle the problem of relatively low wages at Japanese factories in China.

This rebalancing,though,could take decades. In the short term the high-speed growth much of the rest of the region has enjoyed will moderate. Growth will not be measured against the worst of the slump; and faltering recovery in the G3 will dent exports,however well China does. The golden age is not here yet.