Janet Yellen the right choice to put world back on road to recovery
- Former US Federal Reserve chairwoman has the qualities needed to be Treasury chief having tackled economic crises, supported free trade and warned of climate change – all of which should please China
Yellen will be the second central banker since Tim Geithner – an Obama hire – to serve as Treasury secretary, and the second former Fed chairman since president Jimmy Carter’s appointment of William Miller to the Treasury. Her new job will be very different from her previous one, which was in charge of the monetary policy of the most powerful central bank in the world and entailed working closely with bankers. It will be much more political.
It also comes at a fortuitous time. The world may be seeing light at the end of the tunnel following the economic devastations wrought by the pandemic. The Organisation for Economic Cooperation and Development expects the global economy to build momentum for recovery over the next two years, with growth in real gross domestic product projected to reach pre-pandemic levels by the end of 2021.
Just as it did with the last global economic crisis, the OECD expects China to drive recovery by contributing more than one-third of global economic growth next year. However, the contributions of Europe and North America will be smaller.
Yellen’s experience in fighting the last global financial crisis and the Great Recession will put her in good stead. She and her boss, president-elect Joe Biden, may hopefully spend less time fighting China and put more effort into promoting economic stimulus to kick-start domestic growth. In doing so, her government will have followed China’s path in helping the world economy recover.