London (Platts)--12Oct2009/743 am EDT/1143 GMT

China and the emerging economies of Asia are leading the world out of the current economic downturn, according to Danny Quah, professor of economics at the London School of Economics, speaking at the London Metal Exchange's metals seminar held in London Monday.

"A year ago we were looking into an abyss," said Quah. "The world was divided into two groups, those countries in deficit and those in surplus. It was thought that those countries in deficit, like the US, would lead the world out of the recession."

Quah said that industrial Asia had seen production dip a little but that it had started to see a push upwards since the second quarter of 2009 which continued to strengthen, a move which was not expected by many just a year ago.

"This has happened at least twice before," said Quah, citing the global downturns of 1991 and 2001. "Asia carried growth forward in those instances. We have seen the US start to dry up as a well of consumption. This has not slowed down China. It has started to propel global growth in previous downturns."

Quah said that given emerging Asia's economic resilience in the face of previous downturns, observers should not have been surprised when the Economist magazine reported that China was leading the world out of recession earlier this year.

He also highlighted the downsizing of the US' role as the world's largest consumer, saying that Japan's exports to the US had been declining steadily and that Japan's trade with China now exceeds that which it trades to the US.

"We've seen the emergence of a trade cluster in Asia which has given it greater strength and resilience," he said. "The global economy's center of gravity has shifted eastwards. We shouldn't be surprised that China has taken the lead."

--Michelle Madsen, michelle_madsen@platts.com