While the US once may have been the world’s preeminent economic superpower, Cramer said Monday, that’s no longer the case. A certain communist country has proved itself quite adept at free-market capitalism.
China is now far more important to the global economy – and therefore many parts of the American economy and our stock market – than even the US. Investors who don’t fully grasp the Middle Kingdom’s new role as world leader will find it near impossible to make money.
China’s fate has become our own in many respects. The country was financially sound enough to buy trillions of dollars in US debt when we needed it most, which was key to flooding our system with money during the credit crisis. The Chinese also propped up American manufacturing and infrastructure companies, while US banking teetered on the edge of collapse. On the flipside, Lehman Brothers’ demise in September 2008 may have been a low point for our markets, but it was China’s decreased demand for goods and services that eventually pushed us into a depression.
Then again, it was resurgent Chinese demand that lifted the US out of that depression. So the country’s influence just can’t be understated. Joy Global , Caterpillar , Nucor , US Steel , CSX and a host of other American firms all rely on this overseas bellwether to drive much of their business. And the tech sector’s no different. A number of related stocks moved higher when China announced its $40 billion wireless infrastructure build-out.
About a quarter of the world’s population lives in China, and the economy still has plenty of room to grow. Take into account a political system far less susceptible to Washington-style gridlock, and you can see why Cramer wanted viewers to recognize this new economic superpower.
“It’s time to face facts,” Cramer said. “The People’s Republic of China, and not the US, is the most important capitalist country on earth.”
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