According to an article published in the Wall Street Journal today,a slower growth in China's Economy and the credit crunch that monetary officials are implementing, heightened concerns about rising debt loads and the safety of China's banks.
The latest Chinese indicators(see previous posts on this blog) show a slower chinese economy
but "this is definitely bad for commodity suppliers like Brazil and Indonesia. It's also likely to drag on economies in China's nearby orbit such as Korea and Taiwan"
From the perspective of the U.S, however, a slower China is arguably a good thing. America's exposure to Chinese demand is limited. Goldman Sachs calculates that companies in the S&P 500 directly attribute a mere 5% of revenue to emerging markets, and just 1% to China.
That might understate the figure somewhat, as companies break down revenue into catch-all overseas categories such as Asia-Pacific that might include China along with Japan and others. And while China isn't the biggest chunk of revenue, it has been an important source of revenue growth.
There are two additional benefits from the Chinese growth slowdown:
1. A slowing China means lower global demand and more room for the Fed to keep the monetary taps open.(So it allows more QE).
2. At a slower rate growth China will demand less oil,iron ore and copper. So that is good for everyone else's input costs, including U.S consumers and companies that rely on raw marterials. The journalist of the WSJ argues that the new leaders of China are pushing for an
end to the building boom(I would never arrive to this conclusion knowing the future policies of growth led by Premier Li Keqiang,although he is not keen to a real state boom, he is committed to urbanization in China)
"The more important thing about China's slowdown is that it's a necessary part of Beijing's goal to rebalance the economy away from reckless investment toward more sustainable consumer-led growth".
As readers of this Blog have a more closer knowledge of the reality of China and its leaders, so it will be up to you to draw your own conclusions on these matters.
The latest Chinese indicators(see previous posts on this blog) show a slower chinese economy
but "this is definitely bad for commodity suppliers like Brazil and Indonesia. It's also likely to drag on economies in China's nearby orbit such as Korea and Taiwan"
From the perspective of the U.S, however, a slower China is arguably a good thing. America's exposure to Chinese demand is limited. Goldman Sachs calculates that companies in the S&P 500 directly attribute a mere 5% of revenue to emerging markets, and just 1% to China.
That might understate the figure somewhat, as companies break down revenue into catch-all overseas categories such as Asia-Pacific that might include China along with Japan and others. And while China isn't the biggest chunk of revenue, it has been an important source of revenue growth.
There are two additional benefits from the Chinese growth slowdown:
1. A slowing China means lower global demand and more room for the Fed to keep the monetary taps open.(So it allows more QE).
2. At a slower rate growth China will demand less oil,iron ore and copper. So that is good for everyone else's input costs, including U.S consumers and companies that rely on raw marterials. The journalist of the WSJ argues that the new leaders of China are pushing for an
end to the building boom(I would never arrive to this conclusion knowing the future policies of growth led by Premier Li Keqiang,although he is not keen to a real state boom, he is committed to urbanization in China)
"The more important thing about China's slowdown is that it's a necessary part of Beijing's goal to rebalance the economy away from reckless investment toward more sustainable consumer-led growth".
As readers of this Blog have a more closer knowledge of the reality of China and its leaders, so it will be up to you to draw your own conclusions on these matters.
