The final quarter of 2012 saw a welcome improvement to the HSBC Emerging Markets Index as it recorded an incremental acceleration in economic growth.
Climbing to 52.9 from 52.2 in the third quarter, while hardly a sign of buoyant economic growth, this slight upward movement signals an encouraging shift away from the downwards trends which characterized last year.
Improvement for the quarter was driven by a turn-around in manufacturing conditions as activity picked up following a modest contraction in the third.
Pointing to an encouraging start for 2013 new order levels also picked up, growing at their second-fastest rate since the second quarter of 2011.
An accompanying contraction in export orders indicates that domestic consumption spurred this increase in new orders, helping the four largest emerging economies, the BRICs (Brazil, Russia, India and China), post a return to growth in the fourth quarter. Notably in China, the outlook for growth is improving and while it has yet to resume the pace of growth it once enjoyed, it is pivotal to this story.
China's growing influence means it is useful to think about the world economy in terms of two separate narratives, coined "The Great Rotation"; an "old world" story which continues to be one of ongoing deleveraging in Europe and US, and a "new world" narrative which tells a story much more focused on the structural dynamism of the emerging world, and China in particular.
"Old world" exposure to China is minimal at best with the US exporting just 0.7 percent of its gross domestic product (GDP) to China and the U.K. a lamentable 0.4 percent.
Typically, those countries which have increased their trade exposure to China, usually at the expense of their exposure to the "old world", have enjoyed rapid gains in economic activity over the last decade or so.
Stronger connections with China have thus far paid dividends, with benefits accruing mostly to those countries either geographically close to China or important in satisfying China's seemingly insatiable demand for commodities. Many of these are emerging nations.
China's economy continues to expand, albeit not at the pace of growth once enjoyed, but it is now a far larger economy. In fact, 2014 is pegged to be its biggest ever contribution to global growth.
China's enhanced gravitational pull means it is set to extend its influence beyond that of the U.S. or Europe in shaping the economic destiny of many emerging nations.