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There is considerable hope that China will be able to lift the regional, or even the global, economy from the current slump. Although China’s latest growth data was undoubtedly weak by historical standards, its 6.1% y/y growth in Q1-2009 was the best performance of any major economy. Hence, most people are keeping the faith that China will be the first to emerge from the current global economic downturn.

That said, without the traditional engines of growth, namely the US and Europe, the global economic picture is still gloomy for the rest of 2009 and for 2010. China is not yet large enough to take over from the US and Europe and revive the global economy on its own, even though its contribution in recent years has been significant. Demand from China will not be sufficient to compensative for the drop in capacity caused by shrinking demand from the US and Europe. After all, personal consumption expenditure in the US is eight times China’s.

Nonetheless, selected Asian economies are positioned to benefit more than others from the rebound in the Chinese economy. They have strong economic ties with China through a number of channels – trade, tourism, capital flows, and correlations in their financial markets. Hong Kong, Singapore, and Taiwan are well-placed to benefit. While this may not rescue their economies from recession in 2009, it does provide some hope for their respective outlooks for 2010 and beyond.