Partner Article

US Dollars: How Strong is Too Strong?

With China posting its slowest growth in 25 years, people are understandably nervous about the state of the global economy, and are rightfully asking the question: What does China’s bear market mean?

China’s stock market has never been an accurate reflection of the state of the Middle Kingdom’s ecoomy. Whereas markets in more developed economies like the US and the UK are dominated by institutional investors, in China it is the opposite. In fact, it is estimated that somewhere around 80% of investors in China’s stock market are individual investors.

So while China’s bear market isn’t enough to scare people off, another thing is: it’s growing levels of debt. China essentially dug itself (and the rest of the world) out of the Global Financial Crisis in 2008 by investing in massive infrastructure projects. This worked, but there is only so much you can build. And China built- a lot. It is estimated that between 2010 and 2012 China laid more asphalt than the US did during the entire 21st century.

The dollar has never been stronger, while China is facing its slowest growth in 25 years. What the future holds is anyone’s guess, but it looks bleaker with each passing day.

This was posted in Bdaily's Members' News section by Steve .