Sibos 23: China, the US & climate

The macroeconomic landscape is facing divergent but equally vexing challenges. There is, however, good news to be found.

The United States and other advanced economies are currently assessing whether they have delivered enough monetary policy tightening to deal with the largest global inflation upsurge in five decades.

China, on the other hand, has reached the end of a two-decade economic super cycle and is beginning a transition to a much slower path of growth.

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If those two forces weren't complicated enough, climate change is a challenge that has very much moved from the future to the present. The focus now is not just on the investment task and transition, but also the adaption task, as we see visible evidence of climate change almost every day.

But there is good news we should be latching on to.

Unemployment in most economies outside China is very low. Stable and secure employment is the first bastion against inequality.

In a world of constrained resources, many economies are realising those parts of society marginalised from the labour force may well be their largest untapped resource. The benefits of diversity are clear, and more economies are acting on this.

And lastly, China, while it is undergoing a transition to slower growth, has the policy tools and awareness of the challenges to maximise the chance of its adjustment is a smooth and gradual one - rather than acute and abrupt.

Richard Yetsenga is Chief Economist at ANZ