A growth slowdown is hardly shocking for an export led economy.

This is no surprise for an export led economy dependent on faltering global demand.

Under these conditions, export led growth by major economies is a threat to the world economy.

Is Export Led Growth Passé?

There were no surprises in the basic thrust of the strategy a structural shift in China s investment and export led growth model toward a more balanced consumer based and services led economy.

A growth slowdown is hardly shocking for an export led economy. But China is in much better shape than the rest of the world.

With the Chinese economy far less threatened by export led weakening than it was three and a half years ago, a hard landing is unlikely.

Policies aimed at ensuring export led growth also include export subsidies and barriers to imports.

Domestic demand led growth will be a more reliable strategy than export led growth.

Europe is export led China s largest source of external demand as China goes, so goes the rest of China centric Asia and, from there, the ripples reach the shores of an increasingly export dependent US economy.

The remainder of the Asian led US export impetus is spread out, led by South Korea, Japan, and Taiwan all export led economies themselves and all heavily dependent on a slowing China.

There were no surprises in the basic thrust of the strategy a structural shift in China s investment and export led growth model toward a more balanced consumer based and services led economy. The transformation reflects both necessity and design.

Most important, export led growth must give way to domestic economic drivers.

The lesson is clear export led growth is the way to go.

Their response harmonized national export controls led to the Australia Group's birth.

China s export led economic model has reached its limits, and the transition to domestic led growth is intensifying internal frictions.

As China s economy grows relative to the economies of its trading partners, the efficacy of its export led growth model must inevitably fade. As a corollary, the returns on massive infrastructure investment, much of which is directed toward supporting export growth, must also fade.

An undervalued currency enables an economy to integrate into the world economy on the basis of strong export performance.

Export led growth meant that China could produce without worrying about developing the domestic market.

With Belarus s economy crumbling and its export markets withering, Russia could exploit Lukashenko s vulnerability.

And more than 20 million migrant workers reportedly lost their jobs in export led Guangdong province.

Now, Merkel must consider whether export led recovery can cure the country s longer term economic ills.

That is why it should not hanker after any ersatz export led or state directed growth.

In an optimal world, the surpluses of countries pursuing export led growth would be willingly matched by the deficits of those pursuing debt led growth.

Beginning with Deng in the late 1970 s, scientists and engineers technocrats with the determination to convert a dysfunctional centrally planned economy into an investment and export led colossus framed and implemented a producer oriented development model.

The country s economy remains unable to make optimal use of relatively high energy export revenues.

A cut in export guarantees would put the Iranian economy and Ahmedinejad in real jeopardy.

After all, export led growth policies can succeed only if other countries are willing to run deficits.

Under these conditions, export led growth by major economies is a threat to the world economy. This is true for China, Germany (as French Finance Minister Christine Lagarde has consistently reminded her neighbor), Japan, and the United States.

So a recession in Europe would cause a slowdown in China s export dependent economy as well.

Reserve accumulation was also a by product of China s deliberate currency undervaluation to promote export led growth strategy.

For China, there is a deeper meaning to recent global developments. A second major warning shot in three years has been fired at this export led economy. First, the United States, and now Europe China's two largest export markets are in serious trouble and can no longer be counted on as reliable, sustainable sources of external demand.

Meanwhile, the faltering European economy and slowing GDP growth in China and elsewhere are impeding export demand.

In emerging markets, slow growth in the advanced economies has shut down a traditional development path export led growth.

As a result, there are now major questions about the sustenance of China's long powerful export led growth model.

First, China will begin to wean itself from the manufacturing model that has underpinned export and investment led growth.

Indeed, strong Chinese demand has supported its trading partners export led growth for much of the past three decades.

The euro s strength, despite the magnitude of the eurozone s difficulties, makes an export led recovery strategy harder to realize.

Nevertheless, developing countries have been falling over each other to establish export zones and subsidize assembly operations of multinational enterprises. The lesson is clear export led growth is the way to go.

How bad would that be? After all, many Asian countries have achieved impressive export led growth under the current system.

But China s export led development model will need to be adjusted as global trade and financial balances become more contentious.

Not surprisingly, Asia led the way, accounting for 33 of the total US export surge over the past three years.

Transforming China from an export driven economy to one that relies on domestic consumption requires two fundamental reforms.

With domestic demand still weak, more export demand is just what the doctor ordered for an anemic economy.

As the example of export subsidies shows, the two models can co exist happily in the world economy.