Sunday, December 12, 2010
As China Rolls Ahead, Fear Follows
For the last two years China's economy has been growing at a substantial rate. This is somewhat due to the government issued stimulus program and aggressive lending by state-run banks. However now economists are arguing that China may be headed in the wrong direction. Some reasons include high inflation, large amounts of government debt, and asset bubbles. The problem with this is that if China experiences an economic slowdown, this will then greatly affect the U.S.'s economy as China is a major holder of United States Treasury debt and a major destination for American investment in recent years. So if China does in fact begin to slowdown in their economic growth it could have large impacts on many other countries including ours... Any Opinions?
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3 comments:
There have been many concerns about China's growing economy and the possibility that they will take the place of the US as a global hegemony. This is good news as far as that long-term problem. However, it will likely cause problems in our already unstable economy which is a problem in the short-term.
I don't see this as good news at all. Either way it's a disadvantage toward the U.S whether China experiences economic growth or not. If the U.S are so afraid that it will be greatly affected if China experience economic slowdown then stop being defendent on China. Bring jobs back or outsource jobs somewhere else. And don't borrow money from a country that is your economic rival
We borrow money from China because it is the only country with enough to finance all our debts.
Basic economic has shown that restrictive trading taxes, quotas, or other policys actually hurt everyone.
I am very suprised that American news has not spent more time on inflation and 'bubble' problems in China. Our real estate bubble led to this world wide recession - China's real estate bubble is possibly larger than ours even was.
Also, the only reason I could see China agreeing to raise the value of the RMB (the yuan, their currency) is to counteract the high inflation. This is a point our politicians should be stressing if they are going to continue to try to pressure China about currency imbalances.
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