Where many see warnings, Bill Cheney perceives plenty of scope for growth in the world economy Are global markets about to climb a wall of worry? American economist Bill Cheney thinks he knows the answer. Just flip through the newspaper, he says, and count the number of headlines alluding to rising interest rates, the US fiscal and current account deficits, global security concerns and surging oil prices. It is the kind of gloom and doom that can cloud an upbeat story. But viewed from another angle, the global economy actually looks quite healthy: industrial production has been expanding quickly, business confidence and investment growth are buoyant, and trade is growing at rates not experienced for a decade. 'The impact of rising oil prices would have been of greater concern if generally the world's financial markets were not in such good shape,' said Mr Cheney, chief economist of MFC Global Investment Management, the asset management arm of Manulife Financial Corporation. 'Yes, higher energy prices are a negative, but most well-run businesses have factored in rising costs over the past year.' He also believes terrorism fears will have only a short-term effect on financial markets. The loss of jobs to Asia, a frequent topic during the recent US presidential campaign, is little more than scaremongering, he says. About 300,000 to 400,000 jobs from the US service industries have migrated to Asia in the past year. Across the board, about 10 million jobs are lost annually in the US, and 11 million created. 'Since the establishment of diplomatic relations between China and the US in 1979, it has become common practice for the Republican or Democratic presidential candidate to severely criticise each other's job-protection policies.' But historically, there is little evidence that job protection through tariffs works either, says the one-time tariff policy adviser to the World Bank. 'When the US imposed steel tariffs on China, US users of steel were soon screaming murder,' Mr Cheney says. Surveys show that for every US company in favour of tariffs, 16 are against. If anything, the biggest worry is too much growth and potentially destabilising demand from China, says Mr Cheney, who completed his doctorate studies at the Massachusetts Institute of Technology. 'Prices might slow growth down, but [they are] unlikely to bring it to a standstill. A greater threat to world economic growth would be an inability to meet demand,' he says. Even without supply disruptions in Iraq, Nigeria and Venezuela, there would be a high demand for oil, with ever-higher quantities heading towards the mainland. Chinese companies, now in negotiations with leading exporter Saudi Arabia for next year's supplies, are expected to buy 25 per cent more Saudi crude than last year. 'In economic terms, China is dominating the same space in emerging markets that the US occupies in the larger world,' Mr Cheney adds. Investors can benefit by buying the stocks of those companies which are well positioned to sell into the mainland growth story. 'Find companies that are profiting from selling to China, whether they are Japanese or American capital-goods producers, or Australian, Indonesian, or Canadian mining companies. 'In addition, foreign companies who are doing well in the domestic Chinese consumer goods markets are an interesting play. But the Chinese stock market itself is extremely high risk and probably not a great bargain.' Indonesia is expected to lose 150,000 jobs to China this year in textiles alone. Yet the country is also expected to see gross national product growth jump from 3.8 per cent last year to 5 per cent this year, in part due to Chinese demand for Indonesian petroleum products, palm oil and rubber. 'We know that the Chinese government is clearly trying to engineer a soft landing. There is no reason to expect that there would be any kind of serious overshoot at this point, but it is a risk.' He cautions against speculating on a currency revaluation, saying shirts will be burned before anyone reaps a harvest from an adjustment of the yuan.