U.S. factories rebound, but Europe, China falter
Speaking of future predictions....
It looks like some numbers came out today indicating that Chinese export demand is slowing down, though still growing. In addition, China is on track to post it's lowest growth rate in 23 years, according to the article.
So why is this important?
These numbers are starting to indicate to the world (and to China) that perhaps the armor is not without its cracks. It wouldn't be too crazy to guess that China knew about these numbers a few days ago, which inspired some of the action taken at the forum on economic reform.
This is by no means a harbinger of doom. Rather, numbers like these simply increase the volume of the little voice inside economists' heads that keeps trying to whisper, "But what if...?"
Ah yes, "if." The least beloved uncertainty in the English language.
So to make things interesting, my little blogger voice is asking "What would happen if China simply collapsed, right this second?"
To answer briefly, the effects would be completely devastating. The sheer amount of foreign investments that would be lost would be staggering, not to mention the disruption in the trade which is crucial to both the US and China's economy. I believe that at this point, we are so interconnected that anything faster than a slow motion decrease in activity from China could greatly threaten our economic recovery.
These numbers aren't necessarily worrying anyone yet, but they do point to the potential for stagnation.
What do you guys think? Is stagnation a legitimate problem that could hurt China? Or if you're feeling more creative, what would happen if China simply collapsed?
I wouldn't know enough about the economics of China to make a clear opinion, but I don't these numbers have any significance. Perhaps I missed it, but did it say what exactly is causing this stagnation? I don't even think China collapsing is a thought to be had. It's completely alien to my thought.
ReplyDeleteWow, China collapsing would certainly seem like a death blow to the U.S. Seeing that the U.S. relies on China for most of its imports, as well as the purchase of its debt, the implications of a collapse would be broad. In the long run, perhaps the U.S. could find other nations to replace its imports from China, or (in a shocking turn of events), the U.S. could actually choose to rely on domestic production for more of its needs.
ReplyDeleteIf China were to completely collapse the U.S. would be hit hard. Like David said we relay on China for most of our imports so if China were to collapse we might soon follow. I know a lot of people that wish we relayed on domestic production more and I am one of them. I would love for the U.S. to make more Made in America resources especially when you start to think about what could happen if China fell.
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