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America rises as China collapses

Flags: USA and China

There are 2 major economic surges that we have been able to follow from Q4 2015 until today and those are the rise of the US economy and the crash of the Chinese economy. One of the major questions is if there is a correlation between these two economic leaders both in getting to this situation and for what is to be expected in the future.

For the US, 2015 was a banner year with a steady rise in NFP numbers and the healthiest economic outlook since the crash of 2008, even leading to the first raise in the interest rate in nearly a decade. In China, however, 2015 was the beginning of a series of market crashes and unsuccessful solutions. China is currently in the process of trying to rebalance its economy from a manufacturing and exports base to a services and private consumption base. The process is not proving to be an easy one, and as such has the world economy on edge and wary of global repercussions.

So what is the correlation, if any, between America's rise and China's fall? For one of the possibilities we must go back to the original US crash of 2008 which had a major effect on the global economy. As simply as possible, America's crash came from people spending too much money they didn't have. Next we saw countries spending too much leading to debt and the 2009 crisis in Greece which became the European depression. Now, we might just be seeing another chapter in the evolvement which is the current China crisis, largely stemming from too much government spending on "ghost" building. Of course, we can also look at these two matters as completely separate independent occurrences which have yet to show the final influences on each other and the global market.

At the end of the day, despite speculations galore, most analyzers and commentators will have to sum up future predictions by saying we just don't know what's going to come, largely because we have not been in such a situation before.  What we can bet on, is that such strong trends in the world's largest and second largest economies will not leave us unaffected.

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