Whatâ€™s more, the Chinese National Bureau of Statistics recently reported that the Chinese economyâ€™s dependency rate on foreign economies exceeded 60 percent. For the first time, Beijing officially admitted for the first time that Chinaâ€™s more than 10 percent annual economic expansion is heavily dependent on the West. How the US goes, so goes the world. A lot of countries are going to start to discover that very shortly.
Thatâ€™s not to say that malinvestment has not occurred thanks to false demand from America (or more accurately, false supply from the very non-free market central banks of China and the US – there are very few individual Chinese investors stupid enough to throw a bunch of money into US treasuries). But this malinvestment only creates the illusion of wealth – an illusion that is now being pierced and would be shattered if China suddenly tried to exchange all of their US IOUâ€™s for real goods.
The moment China gives up this illusion of wealth in the form of paper IOUâ€™s, China will be better off, even if it means a painful restructuring of Chinese industry.
When China does this, they will have even more real savings to plunge back into the Chinese economy. And that means that Chinaâ€™s days of growth are far from over.
The reality: the economies of China and America are intertwined to the extent that disinvestment of one from the other is economically unthinkable.