Tuesday, July 1, 2008

Will the global credit crisis, surging commodity prices and a year many natural disasters... stop or slow the Chinese economy?

2008 was supposed to be a good year for China... supposed to be is key here. The Chinese had hoped the 2008 Olympic games, coupled with the incredible growth of Beijing would shock and awe the world.

Instead, the China has:

a) Been plagued by natural disasters this entire year. Snow, Earthquakes and now continued flooding (see Reuters video below).

b) Had to cope with protests over Tibet and efforts by some to convince the world to "boycott" the Olympic games.

c) Financial markets, including the Shanghai, Shenzhen and Hong Kong stock exchanges have retreated about 50% from their highs back in fall of 2007.

It will take time for the Chinese economy to recover, but the games offer some hope... The question will be whether or not the US economy more importantly, and Europe which is on the verge of a similar economic contagion, can recover.

North America and Western Europe still lead the emerging world in global economic influence. Even if China achieves a growth rate of 8-9%, which is very likely even in the wake of all these problems, in the long term China and other emerging markets will need to see the US and Europe recover.


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