Saturday, October 30, 2010
How Much Does China Matter?
In 2009, China's economy has accounted for about 46% of global coal consumption. It also got through twice as much crude steel as the European Union, America and Japan combined, bought more cars than America last year and looks set to buy more mobile phones than the rest of the world. China will account for 1/5 of world growth this year. The Economist constructed a “Sinodependency index”, comprising 22 members of America’s S&P 500 stockmarket index with a high proportion of revenues in China. The index outperformed the broader S&P 500 by 10% in 2009, when China’s economy outpaced America’s by over 11 percentage points. But in April it reconverged. The ultimate question is whether China will contribute to other nation's growth. It is the largest export market currently, however, it's imports are also falling. Essentially, while China is an important part of global growth, it is not yet enough to actually prop the global economy up during times of crisis.
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3 comments:
I agree. As Becky said, China is a very important part of global economic growth, however I don't think it can be expected to prop the global economy up. The current crisis is a global one which will most likely requires global solutions. I find it hard to believe that one country alone, even one such as China, would be able to bring the world out of an economic crisis on its own. China will most likely play a large role in the solution, however other countries throughout the world also have to step up and help, including the US.
Yes, china is a big contributor to the global market, but it would not be able to support the world in the time of economic crisis. As Megan said, we will need global solutions for the global economic problem that we are in right now. Not one country will be able to change things for the better for us. China will be a key player in the decisions and solutions. They are growing rapidly, but I think they will start to slow down in the years to come.
I think that the article was making an argument that could be applied to any country: a country's exports are only a fraction of it's GDP.The article also mentions China's “transformation from being the world’s factory, toward increasingly being the world’s consumer” but China's increase in global spending isn't going to bring the world out of recession either. It definitely takes a global solution.
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