Abdel
Economist
- Joined
- 5/22/11
- Messages
- 303
- Points
- 38
US is the largest importer of Chinese goods, and China is the largest holder of US debt. It's the mutual relationship.
China's economy is very much export oriented and China's internal consumption is nearly not enough to sustain the economic growth. China's nation has the highest savings rate in the world, they just do not spend very much.
Well, since the Bank of China is printing all the yuans to buy up the US dollar to maintain the peg, sure, chinese people cain't consume as much as they would like to because of all the inflation created by their central bank.
And again, remember, China is LENDING the US money in order for them to buy CHINESE products, lol
See it this way,
There's an island with 5 people on it. 4 asians and 1 american.
The 1st asian's job is to gather wood....the 2nd one job is to go fishing...3rd one is to build a wood house and the 4th one job is prepare the meals.
The american's job is to consume what the 4 asians produced (this is the actual economic situation).
Now you got this 'modern economist' that comes in and tell you : ''See, without the american, these poor asians wouldn't know what to do, couldn't consume, and wouldn't have jobs'' (this is what we constantly hear in the mainstream media).
And of course, this is non sense. To the contrary, if the asians kicked the american off the island, they could consume their own products and maybe even take some time off to relax on the beach!
Economic growth is based on savings and production (why you think china is taking over?) and NOT on consumption and borrowing (why you think the US is sinking?).
Just keep this in mind, since we measure the 'biggest' economies based on their GDP numbers, remember that the US GDP is 70% consumption based on borrowed money, lol....so their GDP can evaporate in a heartbeat.