More on Chinese Investment

Yesterday, I posted about China's Investment Conundrum (specifically, that China can't keep growing their investments at the torrid pace we've seen due to simple math). Below is a comparison of the composition of China's economy vs. that of the U.S., as well as growth in each component from 2001-2010.

To show this in a different way, below is just U.S. and Chinese investment. Combined, they have grown at a ~4.5% annualized clip, which not coincidentally is just about the pace of global GDP growth over that time frame. In other words, China has been taking production market share (a lot of it) from the U.S. (and developed world). At some point in time there isn't any more market share to take (or in theory the outsource trend could reverse), thus the entire consumption pie (including Chinese consumption) needs to grow at a faster pace in order for China to maintain the outpaced growth seen.

Source: BEA / Chinability

Japanese Exports to China > to U.S.

Ugly all around for Japan, but the relative strength of the Chinese economy to that of the U.S. is rather telling / interesting. Bloomberg reports:

Japan’s exports fell 46.5 percent in March from a year earlier, today’s report showed, after declining a record 50.4 percent in February. Imports slid 37.8 percent, compared with an unprecedented 44.9 percent drop the previous month.

Shipments to China sank 31.6 percent in March, after falling 39.7 percent in the previous month, according to a separate trade report released last month. Exports to the U.S. fell 51.4 percent after dropping 58.4 percent in February. Today’s figures don’t include regional breakdowns.

“China’s economy has started rebounding, but the emerging economies on the whole aren’t strong enough to lead the world economy,” RBS’s Nishioka said. “Capital probably won’t flow back into the emerging nations unless the industrialized countries return to growth.”

Source: Customs.Go.JP