China now has the world's second largest economy, but its GDP girth may not directly translate into as solid a market as one might guess. In the video below, Stratfor points out that China, despite impressive growth rates, is both export heavy and consistently dependent on razor-thin margins that can easily turn negative. This leaves the nation on a more precarious footing than developed countries with domestically-oriented economies. Until China makes that transition, Stratfor argues, it'll have a tough time eliminating the persistent threat of social unrest in order to become a sustainable economic powerhouse.
[Read more...]China’s GDP Moderates
July 15, 2010 By Leave a Comment
The currencies are in rally mode again this morning, after a strong, but not as strong GDP report from China last night. Chinese second quarter GDP printed at 10.3%, which is quite a drop from the 11.9% they printed in the first quarter of this year… But, I've got two things to say about this…
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China Lowers GDP Target
Late last week, traders, investors, hedge jockeys and the rest all switched horses in the middle of the stream — by bailing out of the risk assets of currencies and metals that they had bought — and pushed the prices higher earlier in the week. Gold got slammed big-time, so I guess there’s no reason to fear the uncertainty in the world today. Israel and Iran are saber rattling, countries all over the world are shifting out of their long-standing agreements to price oil trade in dollars, China continues to take baby steps toward removing the dollar as the reserve currency in the world and the beat goes on. So I guess there’s nothing to fear about the uncertainty in the world today. Alfred E. Neuman, where are you?
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