FX MACROECONOMICS by Mark A. DeWeaver
THE THREAT OF A DECLINING CHINA
Many Americans view China’s emergence as the world’s second largest economy with trepidation. Te US, it seems, is in decline. China is a ‘rising power’ destined to take over America’s role as global hegemon sometime in the not-too-distant future.
Recently, however, China’s prospects are looking less rosy.
Since hitting
a post-financial crisis high of 11.9% in the first quarter of 2010, Chinese quarterly GDP growth has risen in just two of the subsequent thirteen quarters. Te latest figure of 7.5%, for the second quarter of this year, is
down from 7.7% in the first quarter and 7.9% in the last quarter of 2012.
As the Chinese juggernaut starts to lose momentum, should Americans be breathing a collective sigh of relief? Not really. Unfortunately, China’s decline is likely to be a lot less peaceful than its rise.
12 FX TRADER MAGAZINE October - December 2013
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