Snapshot: China’s Economic Growth

China Economy
The standard of living of Chinese in the years ahead will depend to a very large degree on the economic growth that they are able to maintain.

China is the world’s most populous country. China’s GDP is estimated to have grown at 9.9 percent in 2005. Inflows of foreign direct investment (FDI) into China totaled $86.1 billion in 2005.

China delinked its currency from the U.S. dollar in July 2005, resulting in an initial devaluation of 2.1 percent. Since the devaluation, the Chinese currency has appreciated about 1.4 percent against the U.S. dollar as of mid-July 2006.

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US Economy: The Obama Factor

Barack ObamaThe overall U.S. trade deficit shrank by 5.68 percent in March 2008, falling to $58.21 billion from the adjusted February 2008 level of $61.71 billion. Exports fell by 1.71 percent, to $148.51 billion, for the first time since January 2007. Imports dropped by 2.86 percent, to $206.72 billion. The fall-offs were especially sharp in goods trade – where exports sank by 2.37 percent, to $104.73 billion, and imports declined by 3.36 percent, to $173.34 billion.

The prediction markets forecast a Obama presidency in 2009. The most important and most immediate impact of a potential Obama win would be in the area of foreign policy. The Bush doctrine increased the price of a barrel of crude oil. The troubled U.S. relationship with oil-producing nations Venezuela, Russia and Iran in particular added atleast $20-$30 premium in the per barrel oil price. Lower oil prices and the consequent moderate increase in energy demand domestically, could help reverse another long-term trend: the weaker dollar. U.S. energy imports are running 30-40% of total imports. If the U.S. imports less oil or pays less for the oil that it does import, the trade deficit will improve, increasing the demand for dollars.

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