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Thread: US economic recession benefits China?

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[quote=APAULT,264767]We should consider cyclical and structural changes.  I think we are seeing boith at the moment.

There is a cyclical decline triggered by the subprime mortgage issue and it will take a while to sort out.  That is having some immediate impact on other countries and trade but it is not serious for the world as the Chinese economy with some other emerging nations that are driving world growth, are still very strong. The limited impact might help slow the Chinese economy in line with (the very appropriate) governemnt policy.  However, US investors may be encouraged to look away from the US and invest elsewhere.  If that investment is in China it is likely to cancel the slowing effect we have been talking about.

The structural collapse of the US is more serious.  The US has major economic and social issues, much of it fuelled by massive government borrowing (despite having a series of governments advocating minimalist government activity and low taxation as a cornerstones of their policies).  Why the borrowing...to finance international wars and to porkbarrel (subsidise) industrial and geographical sectors which various politicians need in order to become re-elected).  This corruption is so entrenched that many people no longer notice it, but until it is fixed the US will continue to decline economically.  This will allow other nations to take up the slack, and China is there ready to do just that.  In terms of international power, the US is delivering world leadership into China's lap.  This was entirely predictable, it is straight out of year one macro-economics: subsidies and vote buying rebates reduce efficiency as well as being a form of corruption.[/quote]

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