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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: kris b who wrote (49114)1/8/2006 11:09:16 PM
From: GST  Read Replies (2) of 110194
 
Lets say for the sake of argument that the US is 20% of China's gdp. The US won't stop buying from China if the US slows -- in fact since Chinese goods are cheaper we might actually buy more from China after we slow down. But lets say we do buy less -- lets say our imports from China drop 30% -- a very high figure. That would be 6% of Chinese GDP -- it would only take China 8 months at current growth rates to replace that 6%. If you have been watching China up close and personal for the past ten to twenty years you will see that US demand was the lion's share of Chinese growth ten years ago, but now it is just one of the factors and Chinese consumption is now growing apace the economy. Chinese consumption is the future of China -- not US consumption. They have been working and saving for going on 25 years and they are on the verge of reaping the benefits of that hard work and frugality. They have a strong balance sheet nationally as well as at the household level. They value education and have been busy building their infrastructure and making great strides in foreign relations where it counts. They have been doing most things right -- all the things that the US has been messing up. It is foolish and arrogant to view China as dependent on the US, just as it would be foolish to think that a crack dealer is dependent on the crackheads. We are the crackheads and we are the weak ones as this relationship evolves.
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