Monday, July 6, 2009

China's Economic Growth Continues Faster than the West

In July 2009, Bloomberg reports that China's stock market displaced Japan as the second most valuable stock market in the world, with the Shanghai Composite Index growing 75% from the same period last year. Investors are reacting positively to the Chinese stimulus package, which unlike the US stimulus, has created record lending, increased domestic consumption and boosted the stock prices of domestic firms. Infrastructure spending in the less developed western provinces, high auto and real estate sales and domestic consumption for manufactured goods are credited with China's recent economic recovery. Despite the 'global financial crisis', China's economy grew 7.9% over the same period last year. China's spectacular economic rebound points to a meltdown in the U.S. housing, credit and securities market, which have hit western economies hardest. The globalized impact from U.S. financial troubles did not cross the Pacific as hard as predicted. For the first time in modern history, governments in the developing countries may be looking to China rather than the U.S. for economic and political models to copy. The long term effects of this socio-economic change are unknown.

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