China - Topic Number One Again

China, Chinese Flag
China, Chinese Flag

Everywhere I go, the subject of China comes up.

People who are on the ground there tell me China is booming once again, observers from here say their business there is stronger than anywhere else.

Businesses are looking for ways to sell to the Chinese consumer.

So why does it feel like China's stimulus package was so much more effective than ours?

It's simple: it impacted the smaller economy more directly.

Consider this:

China's GDP in 2008 was roughly $4.4 trillion in U.S. dollars, and the U.S. had GDP of roughly $14.4 trillion.

China's economic stimulus package was $586 billion, or about 13.3% of its GDP. The US package of $787 billion was roughly 5.5% of our GDP.

So of course China's economy is roaring - its stimulus was more than twice the size of America's.

Greg Valliere from Soleil Securities believes the U.S. will catch up as its stimulus takes effect later this year. He now believes US GDP growth should be running at 2 to 3% by the fourth quarter, and that that might be too CONSERVATIVE because the U.S. stimulus is just beginning to kick in.

Stay tuned.



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