Monday, January 11, 2016

THE TROUBLE IN CHINA SHOULD BE OF LITTLE MOMENT TO US

There is a worldwide turmoil about a slowdown in the Chinese economy. Because of noticeably tepid growth in manufacturing in the People’s Republic, there has been a dramatic, even phenomenal drop in the Shanghai Market. Twice in one week it dropped so far so fast that the circuit breakers put in to prevent a total wipeout popped and closed the markets early. On one day they closed within half an hour of opening on a tidal wave of selling.

The U.S. stock markets, in some weird sympathy with China, also went down fast, although nowhere near as much as China, but still by a whopping six plus percent in just one week.

The newspapers and Internet are filled with gloomy tidings, but do they make sense?


I cannot predict the short term movements of markets and I don’t pretend to be able to. But I can count, and this is what I count.

United States exports to the PRC are roughly $125 billion per annum. That sounds like a lot but the total output of the U.S. economy is roughly $18 TRILLION. That means U.S. exports to China are far less than one percent of GDP. But it gets much better.

http://spectator.org/articles/65137/trouble-china-should-be-little-moment-us

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