New Jersey Governor and GOP presidential hopeful Chris Christie is not worried about the recent volatility in China’ economy. That’s what he told prospective voters during his seven-hour visit to the Iowa State Fair.
Last week, China’s Shanghai Composite Index tanked and fell an additional 7.6 percent on Aug. 25. This caused a nose dive of at the NYSE when trading began Aug. 24. Stocks did rebound from the initial dive, but they have not been quick to rise since the initial dip. The average American worker’s pension funds and 401K’s are affected by these swings, as most are invested in U.S. and global markets. It could mean a chuck on change in the retirement account.
John McCormick of Bloomberg Politics quoted Christie last week saying “To strengthen our economy, we don’t need to worry about China. We need to worry about what’s happening in the United States of America. Our taxes are too high, the tax code is rigged for the rich — not for everyday working folks.”
Christie is correct when he said the United States need to be vigilant of growing Chinese and Russian militaries. Instability or tensions in Asian would effect our allies like South Korea and Japan, but this issue can also affect global trade. The U.S. needs to multi-task.
As a country, the U.S. cannot only think globally on issues of homeland defense or counter terrorism. As Monday’s market crash shows, our economic fates are intertwined and not just with China. If the NSE of India, the Nikkei in Japan or the DAX in Germany fell considerably due to a natural disaster or drop in commodity prices, U.S. markets would react accordingly. We are connected to emerging and developed markets worldwide.
China is one of our largest trading partners in commodities and other goods. According to the U.S. Census Bureau, China imported $123.5 billion in U.S. goods in 2014. The U.S. imported $466.75 billion in Chinese goods during the same time frame. As the Chinese government adjusts the value of its currency to stem ebbs and flows in their economy, it creates great unpredictability for the U.S.
The country also holds the second largest amount of U.S. debt — $1.2237 trillion based off figures released by the U.S. Treasury department in April. Although they were recently overtaken by Japan as the largest holder of U.S. debt — Japan now holds $1.2244 trillion based on the same report — China’s loans could still build a lot of roads and bridges and produce social security payouts.
China holds nearly 1/6 of the world’s population at roughly 1.65 billion. Although reports show that growth has slowed, that’s enough people to keep them around for a while and in a powerful position globally.
As presidential candidates barbecue and stump they’re way around the state, China’s recent woes should be a topic of conversation. It may not bring the sound bites, but it could be a big question mark for the next man or woman to sit in the Oval Office.
Contact Mike Mendenhall at
515-674-3591 or
mmendenhall@jaspercountytribune.com