China's RMB devaluation is good news not only for China but also for the world economy. China is the main engine of global growth, therefore any weakness in its economy has negative consequences for everyone.

The main feature of the global economy since the international financial crisis began in 2008 has been a further deceleration in the already slow growth of the developed economies. Figure 1 shows their annual average GDP growth since 2007 has been less than 1 percent a year, compared to an average 5.5 percent for developing economies led by China. From 2007-2014 China accounted for 34 percent of world growth compared to 14 percent for the U.S., 4 percent for the EU, and 1 percent for Japan.

Figure 1

None of the major advanced economies, due to general ideological opposition to State intervention in the economy, has been prepared to address the underlying problem causing slow growth - low fixed investment levels. Consequently despite pressure for State infrastructure investment from leading economic figures such as former U.S. Treasury Secretary Larry Summers and Martin Wolf, chief economics commentator of the Financial Times, the advanced economies remain trapped in low growth by their dogma of "private good, State bad." Instead, they attempted to find a way out by other policies they believed were in their own interests - but which simultaneously damaged other economies and failed to overcome the underlying problem.

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