Global Influence Between China and The US

China now being the richest and most advance nation in the world, the U.S. economy struggles to recover.  It was once believed that Japan would have overtaken as the richest of all countries.  With the Chinese economy on the rise this offsets a widening wealth gap of both urban residents and the rural majority.  Since 2000 and 2009 China had quadruped thus becoming the world’s leading economic power.  As an active trader in financial markets, China should be recognized as one of the most strategic master players in their strategy to pass the hegemony of the smartest way for the United States.

       In the beginning of September at $1.42 for one euro and $1.48 for one dollar of the US, the index was falling back to a resistance level of 80 of the US dollar index.  This becoming, the obvious reason the dollar being the weakest of the top carry-trade of currency.  For years the Japanese yen has been at an extreme low for short-term interest rates in resulting the US dollar to become the weakest. With little sign that the United States is set to withdraw from its ultra-loose monetary policy any soon to support the country’s economic recovery it is attractive to sell low-yielding dollars, to finance the purchase of riskier higher yield assets, particularly in commodity rich countries like Australia and Canada. This strategy was widely used in the years prior to the eruption of the financial crisis.(1) Rebalancing the global economy would allow for a stronger yuan over time, but financial experts agree that it will take at least ten years before the yuan could be a currency of global importance. In this respect, the effect of China having started to sell bonds denominated in yuan on the global financial markets as a threat to the dominant role of the dollar is strongly overstated in the media.(2)

     With the U.S. economy nearly four times the size of China’s, the growth of the GDP is expected to reach at staggering levels shifting the balance to surpass of the U.S. GDP in the next 20 to 30 years with the consistent high levels of growth.  Although the economy is neither invincible or without problems, this rapid growth of the GDP is somewhat projected to slow for the year 2009 and a expected recovery for the year 2010.  China is generating a widening gap of wealth for the residents.  The annual household incomes grew by roughly a mere 7,100 RMB according to the rural.  It’s also reported that the urban household’s income roughly grew to surprising 20,800 RMD during this same period between 1997 and 2008.  With such staggering numbers there is the possibility of the Chinese facing less developed infrastructure and poor health care systems and education available.  This kind of rise is pushing millions of rural Chinese to relocate to other cities in search for public services of better quality and economic opportunities. 

     In conclusion, China and the US become a decision of making a duo for truth and a long passive participant in global summits.  China now becoming the biggest economic giant with a reputation as a important international player.