Race to Recovery

As the nations of the world attempt to climb there way out of the global recession, China remains confident that it will pull through these dark economic times first. Barack Obama talks much about plans to help the economy. Besides stimulus packages, Obama will make use of the other side of fiscal policy. Whether it is, infrastructure, communications, or a green revolution, China will be benefited. For fourteen years China's leading commodity of exports have been mechanical and electrical, totaling at about 60% of exports. Moreover, 60% of these goods make there way to the US, EU, and Japan. With China producing a large amount of the goods, the US needs to complete such an economic booster.

Zuo Xiaolei, chief economist for Galaxy Securities, listed three reasons why China will pull out of this situation first. One, China has built its self up on what he calls a "real economy", meaning China produces actual products, manufacturing goods for the world. Compared with Americas "virtual economy", though he does not go in to the meaning of this I imagine that he is referring to our stock market driven economy. Secondly, China remains to have the fastest growing aggregate demand despite the fact that it has been halved recently from 13% to 6.8%. Additionally, the Chinese are savers, saving at a rate of almost 40%, making it possible for them to invest in the private sector of the economy. Last is China's pseudo- capitalist economy. Because china still has communistic practices, China can nullify some of the capitalist whiplash the rest of the world is feeling. The vast majority of China's banks are owned by the state. 30% of China's mechanical and electric product suppliers are state owned as well.

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