Will China Be Number One?

Much was made today about China’s economic growth pushing them to the second spot on the worlds GDP list passing Japan for that slot. It is a remarkable tale for a country that many economists still view as a developing nation.

Seven years ago China was the number seven economy in the world. The US GDP was roughly 5 times as large as China; it is now three times as large. The rate at which China is growing could have it on even footing with the US in less than 15 years. In many ways this growth has been a reflection of the Japan’s rise to power during the 1980’s. It appeared that Japan was headed to rival the US, but the real estate bust of the late 1980’s has never been reversed. Much of China’s growth has been fueled by the real estate markets, and of course exports.

Before you sell all of your dollars, it might be good to note that China must keep expanding at astronomical rates to catch the US. Even though they are now the second largest economy, the US is still larger than the next highest four economies put together, and if we have learned anything in the US in the past four years, it is that Real Estate prices can go down!

Keep those stops tight

Todd “Bubba” Horwitz