China Makes Economic Strides
by Efin Advisor | November 12, 2008
The world is increasingly flat: land, sea and mountains no longer form boundaries to divide us. We can now press a button and make major changes to an economy or a company on the other side of the world. As a result, our economics are highly interlinked and what affects one of us can affect us all. As the saying goes, we are only as strong as the weakest link in the chain, and our global economy has many links to connect.
This could not be truer than the bonds of our relationship with China. Many products Americans use every day are made in China. U.S. corporations have very large hubs in China and we trade with China on a massive scale. Our economy affects China, and vice versa.
Recently, China passed a $586 billion dollar stimulus package. Asian financial markets skyrocketed in response to this boost, especially in face of the otherwise bleak news of slowing growth and pending layoffs that were expected to come in the future.
Will China’s stimulus package help the American economy? Will it bolster Asian economies? How does the global economic picture affect your job, your lifestyle and your economic outlook?
Hey, good for them. China is building up their economy the right way and they are doing it a whole lot better than we are in the U.S. Obviously we’re still the biggest single nation in the world in terms of economic power, but the EU is quickly making us obsolete and now China will soon overtake us as the economic hub of the world. It’d be nice to keep the U.S. at the top, but the fact is that we’re losing and we should be learning to deal with it rather than have ill will toward the Chinese. They are succeeding and we should be working with them to try to stay strong under a Chinese-dominated economy over the next 20 years.
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Just goes to show how far our economy has fallen when we’re worried about China dominating us. If China’s economy collapsed, ours would too. Make no mistake about our dependence on China. And their stimulus package? I’m sure that’ll have a ripple effect that will be felt positively by every nation in the world. China will soon be the new economic power in the world, and the United States appears to be completely ambivalent. Such a shame that this economic power had to go out with a whimper, especially when a country with as sordid a past as China is the one about to take the mantle.
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The interconnected economy of today means that when one economy does well, other economies will tend to do well. I don’t know if China’s stimulus plan will directly help the American economy, but I can say that if China’s economy goes under, it will be very bad for our businesses. We have successfully opened our markets through free trade agreements to the point where our economy is tied to the rest of the world. Our crises are their crises, and what helps their economies will help ours.
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I think it is possible that the only reason economies got better after the stimulus package was because of the perception that things would be better. I think that there is a lot to be said for economies responding to the confidence of shareholders in the market. As much as the money probably helped those to whom it was directed, the broader impacts of the package are mostly perceptual. Needless to say, it will help our economy some too as people believe that the chinese are taking control of the situation. I am eager to see what will happen in the coming weeks.
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Every nation gets it 15 minutes. Remember when we all thought Japan was the next economic world power? Look how that turned out. China may be growing at a faster rate than the U.S., but remember, it had a much lower base GDP to start with. That means it’ll be decades before it has any prayer of catching up to us. Is China becoming more powerful? Sure. But I reject the notion that we should be scared of China or that they’re the next big world power. Get back to me once they’ve actually bettered us, if that actually ever happens.
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China has an inflation problem; so does the US. By injecting this much money into the world economy the value of everyone\’s dollars are going down. Banks may be able to lend more money and people may be able to spend more, but they still cannot spend much since all the money is devalued. Its what people really aren\’t taking into account. We need to create confidence, not money.
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It is odd that after a Chinese stimulus package, Asian markets had a fantastic day, while the work the US Treasury has done does not seem to affect our markets very much. Everything is still very shaky and people do not have much confidence for the future. Could this be because China has a much more controlled economy so government action has a much greater effect? Shouldn’t this stimulus package have affected the US market?
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Dominic, are you nuts? China has the world’s largest military, an economy that is making leaps and bounds and has been growing at a much faster pace than the US, and they control over 1 billion people. They have all the makings of the next world power. I’m personally terrified about the future China. Keep in mind, almost all american products are made their: china can control most of the exports to the US and their relationship with Sudan prolongs the genocide in Darfur. These are powerful people who want more of it.
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Why do you think China had to pass an economic stimulus package in the first place? Because its economy is also in bad shape and the government needs to inject money in order to make it worthwhile. I know not to throw stones in glass houses (i.e. the U.S. with this economy) but to say China’s got some kind of economic paradise is absurd. They’ve got serious financial problems, just like we do, and there is no reason to believe their economy is somehow better than ours. As we’ve seen, their economy still relies on ours, as does the rest of the world. I’d have to see different with my own eyes to believe it.
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Does anyone find it odd that China, a communist nation is attempting to spur its economy using capitalist principles? I think that this action very clearly demonstrates which way our friends to the east are trending. I fear that the east asian economy will become susceptible to the same types of fluctuations which plague our economy currently. Why does Beijing suddenly feel the need to release a flood of cash upon its economy, which is pretty tightly controlled anyway?
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I wonder where all the money went. Products, services, and labor in China are substantially cheaper than here in the U.S. Where exactly does one put $586 B. I don’t think that many people actually comprehend what a billion dollars is. In order to spend a billion dollars, you would have to spend $190 every minute for 18 years. Or, given that according to ESPN there were 17,341,012 seats sold at all NFL games last year, with an average price of $62.38. One billion dollars would buy every seat at every game for an entire season. How exactly does one spend Five hundred and eighty-six years of football tickets, when a good breakfast costs 30 cents?
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I admit, I am getting really nervous about China. Don’t get me wrong, I know the U.S. is still #1… for now. But China is growing very rapidly, and the difference between their economy’s reaction to the stimulus package versus our reaction to our stimulus package shows that the Chinese really have a much better economic model than we do. Their economy is growing at a rapid rate, they are creating new jobs and new economic growth all the time, and their influence over the world grows by the day. I wouldn’t want to be on China’s bad side right now.
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I know China is the sexy economic topic these days, but I’m far more afraid of the EU overtaking us economically than China. The EU has already got a much stronger currency than us and their economy is growing at an incredibly rapid rate. Obviously it’s a better situation for us because we’re much friendlier with the EU than we are with China; still, I do think Americans have a reason to be afraid, but it’s coming from Europe, not Asia. Honestly I think China can’t sustain its current growth given that it has historically shown an inability to sustain its own people. Europe on the other hand has been super-rich before.
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