Slowing Chinese Economy Likely to Pinch US, Too

"After watching China narrow the U.S. lead as the world's largest economy, Americans might be tempted to cheer signs that the Chinese economy might be stumbling.

Any schadenfreude would be short-sighted.

In an interconnected global economy, bad news for one economic superpower is typically bad news for another — even a fierce rival.

"It hurts," says Mark Zandi, chief economist at Moody's Analytics. "China is the second-largest economy on the planet. If growth slows there, it affects everybody."

Zandi estimates that each 1 percentage point drop in China's economic growth causes as much damage to the U.S. economy as a $20-a-barrel increase in oil prices: It shaves 0.2 percentage point off annual U.S. growth.

That isn't catastrophic. But to regain its full health nearly five years after the Great Recession officially ended, the U.S. economy needs whatever help it can get."

http://abcnews.go.com/Business/wireStory/slowing-chinese-economy-pinch-us-23608991

 

China is going through a transitional phase. From developing country to developed country. Export driven to consumer driven. It'll have slower growth but that's what's suppose to happen. As long as there isn't any debt crisis from shadow banking loans or significant bad construction project; I think they will be fine.

 

We are definitely dependent on China's economy now also. I expect this to make a big impact on the market in the upcoming months. I think this will be worth closely monitoring.

 

The Shanghai Composite has been drifting lower since its highs of 2009. At the end of 2009 it was trading around 3250. Its now trading at around 2000. Compare this to the performance of the S&P over the same period. From this you can clearly see that the economics of China has nothing to do with the performance of US equity markets. Its cheap money and Fed policy that is driving US stocks not Chinese economic data.

 

Also note that from a technical perspective the 2000 point level on the Shanghai Composite is a big support area. This is the third time this year that the index is testing this level.

 

The world economy is interconnected, so when a big country sneezes the rest of the world catches a cold. Sure, if China is having a problem the rest of the world and the US will feel it too.

 

Of course China's economy is going to affect the rest of the world! And not only this, due to China recently banning the Bitcoin, the Bitcoin has drastically dropped in value. It may not be directly connected to this topic, but it's still worth mentioning. China makes a huge differance to the worlds economy.

 

Bitcoin oscillates no matter what really, but all the countries in the world have business with China so of course they will be influenced.

 

China is self dependent country in the trading market , most off the things chinese imports but very rarely they import from other countries