China is raising rates but long term its economy may speed up again. China and India economies promise to be very strong over the next decade. How does this challenge US?
US Budget frightens foreign investors.
Per Gordon Brown, Asian middle class (not including Japan) will proportionally increase global consumption from 12% to 32% by 2020. What will China do if:
1 – its middle class consumes more
2 – US debts escalate and prints $’s.
China may opt not to finance our debt.
What can US do to pre-empt this?
1 – drastically cut $900 billion in government spending
2 – keep taxes low so entrepreneurs will create jobs, significantly adding Treasury revenues
3 – promote exports to the maximum extent possible by promoting free trade.
China would then invest in our debt.
We must act in 2011. Window to avert economic Armageddon may be less than 1 year. References – recent statement from a Chinese Finance official; books – Aftershock by Robert Weideman, The Great Super Cycle by David Skarica.