Friday, August 13, 2010

China And the US Decouple

Can the US grow without relying too much on China's growth and can China grow without relying too much on the US consumer?

Many US companies have expanded into China during their recent multi year growth surge. That has helped many US companies and their bottom lines. It also has helped US GDP. What happens if China taps on the breaks on all of their infrastructure spending and other spending that US companies sell right into? That will be important since China seems to be slowing its growth more than expected.

Also what happens of the US consumer stops buying Chinese goods? Will China then try to lower its currency to help offset this?

China and the US one fast growing, another slower growing but much larger. Both currently intertwined.