According to some experts, the decoupling theory is a fantasy. The rest of the world is not as resilient as some assume. No economy can ever completely decouple from the US.

However, the magnitude of the impact of a US recession will not be what it was in the past.

As far as China is concerned, the relatively small role Chinese consumers play in the economy is overlooked. Household consumption as a percentage of GDP fell to 36 per cent in 2006, perhaps the lowest such ratio in the world. At the other end of the scale is the US with a household consumption-GDP ratio of 72 per cent.

Therefore, to expect the Chinese consumers to stimulate the economy is also a fantasy.

Also, to expect China to insulate Asian economies from a US recession is another fantasy.

William Tay Kay Chiak