Tuesday, October 21, 2008
Should China Feel Confident?
China needs a healthy global economy to continue its strategy of export-led growth and development. Are other markets sufficiently developed and just as importantly able to absorb Chinese goods if U.S. consumers stop buying? And China still holds a good portion of its wealth in securities and assets tied to the United States, despite some diversification.
Of course, decreasing prices for energy and raw materials are beneficial.
My sense is that China realizes it has to ride the roller coaster of the U.S. economy for the foreseeable future--but that it also sees opportunity to expand its influence. China's sovereign wealth fund is apparently buying more shares of the Blackstone Group.
The China Daily editorialized: "It is quite uncertain whether the US soft power can come back to its pinnacle after the 'financial tsunami.' The rest of the world is not having blind faith in or even turning down the rules of US-style financial games."