Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20
Gold Mining Stocks Fundamentals - 18th May 20
Why the Largest Cyberattack in History Will Happen Within Six Months - 18th May 20
New AMD Ryzen 4900x and 4950x Zen3 4th Gen Processors Clock Speed and Cores Specs - 18th May 20
Learn How to Play the Violin, Kids Activities and Learning During Lockdown - 18th May 20
The Great Economy Reopening Gamble - 17th May 20
Powell Sends a Message With Love for Gold - 17th May 20
An Economic Renaissance Emerges – Stock Market Look Out Below - 17th May 20
Learn more about the UK Casino Self-exclusion - 17th May 20
Will Stocks Lead the Way Lower for Gold Miners? - 15th May 20
Are Small-Cap Stocks (Russell 2k) Headed For A Double Dip? - 15th May 20
Coronavirus Will Wipe Out These Three Industries for Good - 15th May 20
Gold and Silver: As We Go from Deflation to Hyperinflation - 15th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

China and Global Economic Recovery

Economics / China Economy Oct 03, 2012 - 01:02 PM GMT

By: Ian_R_Campbell

Economics

Best Financial Markets Analysis ArticleWhy read: To test the contemporaneous views I expressed four years ago, to observe similarities and differences then and now, and to determine if you agree with my current views.

Commentary then: On July 31, 2009 I commented as follows:


An article today titled 'Is China Leading a Global Recovery says:

"increasingly, many companies see China as their ticket to surviving--and even thriving--in a post-recession world because of its insatiable appetite for goods as it moves toward a consumer-driven economy"; and,

"a lot of people are starting to believe America and China are in two very different boats" and includes interview comments with executives of major companies - at least one of which is quoted as saying: "Is China going to lead the global economy out of this slump? I wouldn't think so".

For the following 20,000 foot reasons that is the camp I am in:

  • first, from everything I have read I believe it will take China many years to develop a consumer based economy that will to an important degree be significantly internalized and self-sufficient;

  • second, I think the current developed-world economies that have the best chance of enjoying long-term growth and prosperity are those that are rich in resources and low in population - examples include Australia and Canada;

  • third, the U.S. is still the world's largest consumer economy and will remain so for some time to come. That said, the U.S. has lost so many (I think irrecoverable) manufacturing jobs it has become and will remain an increasingly dependent service based 'consumer economy' - in circumstances where little economic comfort and growth is going to come from Americans selling hamburgers back and forth to each other; all of which

leads me to the conclusion that continued growth in China does not necessarily mean recovery in the U.S. Perhaps near-term growth in China will bear on U.S. economic recovery in a more significant way than it will in the longer-term, but at the end of the day I simply don't see how the U.S. is going to enjoy meaningful economic recovery and ultimately:

  • eliminate its annual budget deficits - no person or country can forever deficit finance;

  • achieve an appropriate alignment of its net trading balances; and,

  • achieve an appropriate alignment of its Cumulative National Debt

without creating jobs big-time resulting in its consumers spending big-time.

As much as I would like to conclude those things are a possibility for the U.S. going forward, I am not optimistic about such an end-game.

The referenced article concludes with this statement: "Are the Chinese amazed that we're still stuck in recession? That's right. They're holding all the cards and will continue to do so. There is a feeling here that China is still stuck in some kind of Third World mentality. It's not. It's a superpower". I would qualify that statement somewhat. I would say a 'budding superpower' with a probability of the word 'budding' disappearing in the next 5 - 15 years.

Commentary now: Today's China's GDP growth has abated somewhat from levels that country was experiencing three years ago (down from about 10% compound per annum to about 7.5%), with some attendant concerns that China is beginning to have its own internal economic issues. That said, if China's statistics are to be believed, it is still growing at a rate that is multiples of the current GDP growth rates being experienced in the developed countries.

In essence, where China is viewed in the context of America and other developed economies I see no reason to change my view of China today from what it was three years ago.

Ian R. Campbell, FCA, FCBV, is a recognized Canadian business valuation authority who shares his perspective about the economy, mining and the oil & gas industry on each trading day. Ian is also the founder of Stock Research Portal, which provides stock market data, analysis and research on over 1,600 Mining and Oil & Gas Companies listed on the Toronto and Venture Exchanges. Ian can be contacted at icampbell@srddi.com

© 2012 Copyright Ian R. Campbell - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules