Made in China
When you buy almost anything for your home, it is very likely that the tag on the bottom will tell you that it was manufactured in China. There may be a handful of other Asian countries where the item was made, but China is still the leader. It is with this consideration that the current state of world economics finds certain realities. China’s economy has had strong growth while the U.S. economy has suffered. The world’s number two economy is gaining ground on the world’s number one economy.
In a recent announcement, it was learned that China’s economy had grown 10.3% during 2010. That is more than three times the growth in the U.S. economy over the same time period. While there is still a fair amount of difference in the size of the two economies, China is gaining ground at an unsettling pace. The recent visit of China’s President Hu Jintao, and the administration’s lavish dinner for him, are signals that the U.S. depends on China in many ways.
China Impacts the Average American
Why talk about China when this blog features articles about the U.S. economy? Any discussion of China is about the U.S. economy. China is the leading holder of U.S. Treasury debt. They hold nearly $896 billion, which surpasses Japan, the former leading buyer. Because of this, when the U.S. complains about China’s control of their currency value, China has no reason to react quickly. They are in a position to leverage their power over the U.S. in a number of ways. Chinese products are cheaper when the Chinese Yuan’s value is kept artificially low.
The actions of the Chinese and their Treasury debt buying behavior can affect interest rates in the U.S. This is only one area where China has a direct impact on the average American. Just as we are trying to emerge from ‘the great recession,’ this powerful competitor is in a position to put us right back where we were.
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