Tuesday, May 6, 2014

China surpassing US - should we care?


The news that made headlines and shocked some is that the Chinese economy has surpassed the US on a purchasing power basis. This is not something that the Chinese really wanted to happen, but for the first time since the late 1800's, the US is not the world's biggest economy. Is this going to have a meaningful  change in world views? This was expected to occur for so . me time. Now it is a reality. The US has higher per capita income and more wealth, but economic power has shifted significantly. This headlines is, however, not news.

It does tell us that we have to be aware of the economic goings-on in China. We cannot think of commodity markets without having a view on China. This has been the case for years, but this news just reinforces this thinking. The high income economies represent only 50% of global GDP. The emerging markets are going to take up more of our attention, period.

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