Tag Archives: mutual dependency

Two views on Globalization, America, and China

Coming Anarchy:

What’s more, the Chinese National Bureau of Statistics recently reported that the Chinese economy’s dependency rate on foreign economies exceeded 60 percent. For the first time, Beijing officially admitted for the first time that China’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.

The China Explat:

That’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 IOU’s for real goods.

The moment China gives up this illusion of wealth in the form of paper IOU’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 China’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.