Thursday, December 23, 2010

China Bails Out EU

In yet another show of China's economic strength, officials have publicly stated their willingness to bail out the troubled EU nations using their 2.7 trillion dollar overseas investment fund.

China claims the reason is to diversify it's investment debt base, and though this is probably true, there are other reasons this move makes sense. 

For one, Europe represents a larger trading partner for China than does the United States, and with so much of China's wealth dependent on exports, keeping up demand is a priority. 

What is of more significance, in the long term, is what this action means for China's position on the world stage.  For the much of the past century, the US was considered the shepherd of the world economy, stepping in whenever needed to assert authority and rebalance relations.  But with the US now grid-locked with it's own economic and governmental problems, is China stepping in to fulfill the role?

No one can doubt China will have the largest economy in the world within 10-20 years.  But do you think China will also take the position of world "big brother" in the next 10-20 years?  50 years?

1 comment:

  1. I don't think we'll have to wait for 50 years... will happen much sooner. Now if only China behaves with some maturity instead of whining brat...