There has been an argument raging for a long time in regards to China being tied to the hip of the USA, and that their economy would ‘go down with the ship’ as well if the US did not come out of its recession/depression.

Well it seems that ‘decoupling’ isnt just a myth.

China’s economy is charging ahead with a 8.9% GDP growth for Q3.

I had a fellow not too long ago say this was nothing more than a bubble, and that they would face the same fate as the US and Britain…the one part that was missing from that position was the fact that the average consumer in the west is completely tapped out on credit, and so are their governments.

China is the complete opposite, with an average savings rate of 41% among Chinese citizens and a government whos coffers are flush with reserves.

A great excerpt from a recent article with Monty Guild:

CHINA, INDIA, AND BRAZIL

We can see China, India, and other countries growing, and the economic data is very supportive of this view.

We do not believe the same about the developed world.  Rather than inundate readers with every new data point about China’s growth, suffice it to say that their growth is fast and accelerating.  China just announced their third quarter GDP growth at 8.9 percent.  China’s foreign exchange reserves grew by $318 billion in the last six months.  Contrary to misinformed and naive reports, this came in spite of a big slowdown in Chinese exports.  The increase was due to the growth in foreign direct investment; foreign companies building plants, distribution facilities, retail outlets, and other enterprises in China.  The bears and naysayers on China’s economy are looking more incorrect with each passing day.

China’s economy has been moving from an export model five years ago to a hybrid model based on infrastructure, the consumer, and exports.  They have strengthened their relationships with markets within Asia and Europe, and are no longer as dependent upon the U.S. for exports as they once were.  The Chinese politburo is made of clearer thinking, and long-term goal driven engineers, and is very rational in its top down management and goal setting for the economy.  The banking system, although not perfect, is stronger than the U.S., European, and Japanese banking systems.  Capital is being allocated more wisely in China, and the country has huge trade balance of payments and current account surpluses.

India is also doing very well.  The national need for infrastructure is finally being addressed, and Indian entrepreneurs are running a strong economy.  India is still hampered by a socialistic bureaucracy that has always found a way to slow progress, as bureaucrats have used delay tactics and interference to make themselves more important and more wealthy.  Nonetheless, the country is showing strong growth and the middle class continues to expand rapidly.

Brazil is another success story.  Their banking system is operating very efficiently and the consumer is responding with increased demand for auto and home loans.  Much of this is due to the fact that Brazilian rates are now low enough for consumers to be able to borrow to buy a car or house.  Previously, periods of strong inflation and high interest rates had priced consumers out of the market for credit.  Today’s more reasonable rates and lower inflation have set the stage for a period of consumer demand and growth of the Brazilian middle class.

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