Shares up on China stimulus hopes

Recently, the words "recession" and "stimulus package" have become household words. One is bad and the other is good. Suddenly everyone understands the full meaning of these words even if they don't understand the whole economic picture. So the very speculation of Chinese government announcing another stimulus package brought hope and optimism in U.S. market.

China is one of the worlds five biggest growing economy. Chinese economy has still not gotten into the "recession" phase. Its pace has slowed down but still it is expected to meet the economic growth forecast of 8% this year.

However, it is not certain if the Chinese economy can hold on without some help from its government. China's export has collapsed and has dragged the economy to its weakest growth resulting in job loss and social unrest. For so long, America has played an important role in keeping the global economy growing. America's model of buying, using, throwing and buying more has created an environment where there is constant demand for supply. The Asian countries like China and India were producing goods for American market, exporting to America, becoming wealthy and as a result were enjoying a steep economic growth. Now with America suddenly forced not to spend is causing ripple affect in Asian economy.

The question now is: What happens when America stops spending? What happens when people in America start imitating the frugal Asians. Who is going to create a demand for goods? Who is going to buy?

It makes me think that maybe it is time to revisit Mahatma Gandhi's "Swadeshi" policy. "Swadeshi" means "of one's own country". Mahatma Gandhi described it as "Swadeshi is that spirit in us which requires us to serve our immediate neighbors before others, and to use things produced in our neighborhood in preference to those more remote. So doing, we serve humanity to the best of our capacity. We cannot serve humanity by neglecting our neighbors".

Going back to today's economic situation, maybe the Asian countries should balance their economy with exports as well as with serving their own country's market. If they produce what is consumed by their own people, they won't be affected so deeply by economic crisis happening in some other country. This was the case during 1940's great depression in America. The Asians were hardly affected by it. This does not mean that I am against globalization or free trade policy. All I am trying to say is that we need to strike a balance - if the export collapses, the "Swadeshi" demands should keep the economy healthy.