HSBC says China's economy to take centre stage in 'new world'

The United States, Japan and Europe are set to take the back seat to China's economy, which will take the centre stage of the "new world", according to HSBC.

The "old world's" outlook remained bearish, said Stephen King, HSBC's chief economist, adding that debt and deleveraging had slowed growth in the US and Europe.

The failure of countries in the "old world" to exploit the opportunities presented by China's growth is one of the key reasons for their demise, King said.

In an outlook report, HSBC notes that countries such as South Korea, Malaysia and Singapore have all experienced big increases in their export exposure to China. Commodities producers, Australia, Chile and Saudi Arabia have also benefited from China, leaving countries such as France, Canada, Italy and Britain trailing in their wake.

The report forecast US gross domestic product growth to drop to 1.7 per cent this year from the 2.2 per cent forecast for last year.

Europe is expected to improve but will still see negative growth.

Interestingly, HSBC has chosen to take a contrarian stance on Japan's quantitative easing policies. Japan's GDP growth is forecast at 0.2 per cent, against 1.9 per cent predicted for last year.