With all the talk of the United States in decline (and China on the upswing) there's one inescapable fact that often gets lost in the debate — China and the U.S. are dependent on each other and if either country flounders, there will be a dramatic negative effects on both economies.
Recent reports suggest that the U.S. may be beginning to emerge from recession and in an uptick in exports and the continuing strength from international economies purchasing American goods is helping. Likewise, though China is intent on growing internal consumption, they
are certainly still counting on a recovery in global consumption led by the United States.
Currency fluctuations complicate international trade. Still, while much is made about the potential replacement of the U.S. dollar as the world's reserve currency, note that all parties (including China) are cautious in their statements for fear of disrupting the sprouting economic recovery in the U.S..
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This caution is reflective of an understanding that economic ships will likely rise together or surely sink in mass if either country implodes.
The world is no longer a collection of disparate economies, independent and distinct. Borders have collapsed in commerce, migration, and flow of money.
Globalization is here and it's time to recognize that it's in all party's best interests to be mutually successful. Rest assured policymakers know this well and are tailoring comments and actions with this outcome in mind.
Michael A. Yoshikami, Ph.D., CFP®, is Founder, President, and Chief Investment Strategist of YCMNET Advisors, Inc., a registered investment advisory firm (www.ycmnet.com). Michael oversees all investment and research activities of YCMNET. He is a respected lecturer speaking frequently on market issues, tactical asset allocation, and investment strategy. He appears regularly on CNBC and CNBC Asia and can be reached directly at firstname.lastname@example.org.