Tuesday, September 10, 2013

Global Economy: U.S. & China - A Virtuous Circle

(Drivebycuriosity) - This morning we got encouraging news from China. In August industrial production rose 10.4% from a year earlier and retail sales advanced 13.4% (bloomberg). Both numbers were higher than in July.  Last weekend we learned that Chinas`s export growth accelerated to 7.2% in August.

The numbers show that China`s economy is gaining speed again. Last quarter the economic growth had slowed to 7.5%, the slowest growth in the recent 10 years. The number also prove the notorious China crash caller, including New York Times columnist Krugman, wrong (driveby).

It seems that China benefits from the solid U.S. economy as the stronger export numbers show. More sales to the U.S. are good for jobs , incomes and spending in the Asian country. On the other side China´s growth acceleration will boost the global economy. U.S., Europe and the Emerging Markets all will benefit from stronger exports to China.

I get the impression that the global economy entered a virtuous circle: U.S. growth is driving China`s growth. In turn a stronger growth in China will drive U.S. exports and drive the U.S. growth benefitting Europe and the Emerging Markets too.

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