Thursday, 8 March 2012
China: 7.5% growth is minimum; support for emergency fund US infrastructure
The plans of China influence the world more than ever since the start of the Industrial revolution. Asian markets tumbled on the news the new growth target of China was only 7.5%. That is low for China and much more growth in 2012 is unlikely. But to be so afraid economic growth in China will fall down to an anaemic 7.5% in the coming years is not necessary. 7.5% is just the minimum, see the chart of JP Morgan.
A little bit more worrying is the target for growth of M2:14% That is (too?) low when you want more than 7.5% GDP growth.
China is unbelievable successful in producing infrastructure in developing countries with good growth prospects. Now China is creating an emergency fund for US infrastructure according to the China Daily. The American infrastructure is crumbling and now no longer competing with many developing countries. is zo aan het verkruimelen dat die nu onderdoet voor menig ontwikkelingsland. Daar kan een noodfonds The Chinese emergency fund can help the poor Americans. 90% of the workers to make that infrastructure will be Americans, so they don’t need to be afraid for Chinese stealing US jobs. China is the only believable parner to make high speed trains in California. The US no longer has the Money to fund new infrastructure as is the normal case fora n (under)developing country. China is TINA: there is no alternative and they think the Americans wil understand this soon.
Yes we live in a strange world now that has changed, it is the world of the New Normal, but it will go differently from how Reinhart/Rogoff describe, according to China.