Thursday, July 11, 2013

Chinese economy affects the world economy

It looks as if the Chinese economy growth has de-accelerated very significantly. It also looks like we have a gigantic credit bubble in China. If China grows at 3 percent or 4 percent instead of trend-line growth of 10 percent, it will have a huge demand on industrial commodities.

At the same time it will have a huge impact on the income of countries producing commodities such as Australia, Africa, Central Asia, Middle East. if these countries have less income, they buy less from China, Europe and America. The overall demand declines and you have an earnings contraction.