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Sunday, April 28, 2013

Do the Chinese own America?

Source: Pragmatic Capitalism
 
With the US and China together controlling 33% of the global economy, investors cannot help but keep a close watch on their interdependence. For a de-growth in either can meaningfully impact the other at least in terms of value of overseas assets. A slowdown in the US for example does not leave China unhurt. This is because the oriental nation is one of the largest holders of US Treasuries. However, as against common perception, China will not be only victim of an American slowdown. As the chart shows, around 12% of the foreign owned assets in the US are held by the Chinese. Thus a major slowdown in the US is expected to have ripple effects across the world, rather than only in China.

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