( L - R ) Obama, Geithner

BERLIN, Germany:

The recovery of financial systems in the wake of the global recession hinges primarily on achieving a balancing act in the see-saw relationship between China and the United States, two international economics and political analysts have predicted.

Leaders of both countries will have to sideline their political differences to address the economic maelstrom which has caused US$8 trillion in global wealth to disappear, said Robert Ward, director of the global forecasting team at The Economist business magazine's Intelligence Unit.

"These are problems that will take years to recover from," he said during a panel discussion at the Deutsche Welle Global Media Forum in Bonn, Germany, last Wednesday.

Bad marriage

Ward, a former investment banker with Goldman Sachs and Co in the German city Frankfurt and who has more than 20 years' experience in the Asian markets, likened the symbiotic union between the 'G2' - China and the US - to a drug pusher and an addict: China, pumping into the veins of the US economy cheap goods and investment funds; and the Americans, junkies racking up a huge deficit topping US$1.8 trillion, of which the Asian superpower accounts for more than half. At this stage, both nations are stuck in a bad marriage, he surmised, but a bitter divorce could be worse than riding out the crisis together.

Steven Clemons, director of the American Strategy Programme at the New America Foundation and publisher of the political blog 'The Washington Note', sees room for a more robust German role - led by Chancellor Angela Merkel - in anchoring the European Union, and leading a trickle - if not a wave - of economic revival. However, though economies like Germany are showing glimmers of hope - with Berlin registering a rise in investor confidence two months in a row - US housing and share prices have still not stabilised, Clemons said.

"If you're on the market and want to sell a house, you're stuck in it like a beached whale. The numbers are huge because this is a huge crash," said Ward, referring to the staggering US$8-trillion estimate and failure of White House palliatives to cure the foreclosure malaise.

Apocalypse prescripton

Clemons was equally blunt in his prognosis for the global economy's health.

"If the G2 doesn't get it right, the rest of the world sinks," Clemons told journalists at the World Conference Center in Bonn Wednesday in an apocalyptic prescription.

Pundits say the Obama administration's acknowledgement of a Sino-American antidote to the problem seems to be highlighted in recent developments. First, the ambassadorial nominee to China, Jon Huntsman, was announced on the big stage in comparison to appointments to countries like the United Kingdom being a mere press release footnote. Second, Treasury Secretary Tim Geithner met with Chinese President Hu Jintao and Premier Wen Jiabao earlier this week to buttress bridges for a collaborative effort to stabilise markets.

Though immediate concrete results are more fancy than fact, the elevation of China to Priority No. 1 - notwithstanding US President Barack Obama's lengthy laundry list of social and political issues ranging from getting the green light on a Supreme Court pick to fighting two wars - suggests that both nations are coming to terms with the reality that the buck stops with them, the analysts agreed.

Obama's US$787-billion stimulus package and attempts to prop up banks and automakers Chrysler and GM, bleeding profusely from tumbling sales and a business model resistant to innovation, leave more questions than answers about how - and when - the world economy could regain buoyancy.

For now, the audacity of hope could be weighed down by the burden of pragmatism.

andré.wright@gleanerjm.com