2007-02-27 09:55:34 · 5 answers · asked by kriend 7 in Business & Finance ➔ Other - Business & Finance
An economic recession in China will have little affect on the U.S. economy. China's economy is export-driven. The U.S. buys nearly one-forth of China's exports. Meanwhile total U.S. trade with China accounts for approximately 10% of America's total trade with the world. Therefore China is much more dependent on the U.S. than we are on China.
Nor are we dependent on China as a source of cheap labor - there are plenty of other cheap labor markets in the world where we can produce our underwear and Christmas lights.
Bottom line: if there's a recession in China Chinese people will spend less but it will be business as usual for the U.S.; we will continue to import from China and send our dollars there, and China will continue to pump those dollars back into U.S. dollar securities to keep the yuan undervalued and maintain export-led growth.
However, pain will be felt by American equity investors that have bets riding on China. But then, the rewards investors have won investing in China have been possible precisely because of the inherent riskiness of investing in China. If they wanted stability and 5% ROI they could have bought index funds. They knew what they were getting into when they invested in China. If they take a hit due to an economic downturn in China, that's just par for the course. Smart investors have diversified much of the risk away.
America would be much more adversely affected by a recession in, say, Canada or Mexico than China.
2007-02-27 14:37:25 · answer #1 · answered by Hank S 3 · 1⤊ 0⤋
No that much, Wal-mart would have to buy a lot of stuff else were but it would not hurt us that much.
And we are not occupying Iraq. China does not foot the bill for the war.
China needs to be more worried about someone (Iran) trying to send missiles their way...
2007-02-27 10:16:58 · answer #2 · answered by Anonymous · 0⤊ 0⤋
we could lose funds to pay for our war and occupation of Iraq and potential war with Iran,
depending on who you are and what you believe and what your motivation is or if you stand to profit from either of these activites this could be viewed as either negative or positive effects
2007-02-27 10:00:34 · answer #3 · answered by Anonymous · 0⤊ 1⤋
Well they buy more from us I think....but we are sure asking for trouble depending on them too much.....and they work at stealing our security secrets, etc....and we just are too trusting.....
2007-03-07 09:11:05 · answer #4 · answered by samantha 6 · 0⤊ 0⤋
You know I am not sure. In some cases it may be ok and in others it may suck
2007-03-06 16:22:07 · answer #5 · answered by Alisa 2 · 0⤊ 0⤋