China matters.
That statement is undisputed, no matter what side of the political spectrum you happen to find yourself on. It would be virtually impossible to argue that China does not play a powerful role in the global economy. With the world’s largest population, stunningly rapid industrialization, and economic growth over the last few decades, it is no secret that China has been a major driver of economic growth the world over. Factories, shopping malls, and entire cities have risen from ground at an almost frightening clip as firms relocated personnel and capital to China. When the global economy was convulsing in 2007 and 2008, the government launched an economic stimulus program, focused on infrastructure and construction, to help keep the economy growing.
It worked – the Chinese economy kept growing at rates that other countries, including the United States, could only dream of.
Find out what's happening in Teaneckfor free with the latest updates from Patch.
Recently, however, there have been signs of weakness in this once unstoppable juggernaut. The financial system, opaque on its best days, is increasingly dependent on the central bank and is heavily influenced by the government, “ghost cities” are becoming topics of intense media coverage, consumer spending is not picking up the slack, and demand for raw materials and commodities has dropped significantly. Growth rates south of 7% annually, once unheard of, are now being portrayed as more and more likely. The fact that China’s economy is slowing is a topic of daily conversation, but what does it matter to you and your money?
Actually, it matters quite a bit.
Find out what's happening in Teaneckfor free with the latest updates from Patch.
I have attached a link below, from The Economist, that demonstrates just how co-dependent the U.S. and China have become on each other. Apple, all the auto makers, miners, aerospace, retail, and industrial firms all count China among their top customers, and a lot of those firms are U.S.-based or trade on U.S. exchanges. If demand from China slacks off, which it has started to, this impacts these firms and their earnings. If you own shares in these firms, this will negatively impact your money and financial planning.
The world is connected more than ever before. China matters, and what is happening there has a definite impact on you and your money. Investing in the U.S. and investing international are oftentimes one in the same.
