“The Chinese stock market is very disconnected from the underlying economy,” says Arthur Kroeber, founding partner and head of research for investment research firm Gavekal Dragonomics in New York. That doesn’t mean there aren’t problems, however. Kroeber notes the Chinese government’s response to the crisis has created a lack of confidence and trust among foreign investors in China’s ability to keep its economy on a sustainable footing.
“[The government] promoted a stock bubble and when it crashed, they panicked and stepped in. That indicates to me that the government really doesn’t get what markets are about,” he says....
Myth No. 3: China will overtake the U.S. economy in the coming years “Yes and no,” says Kroeber. China will rise to become the biggest economy but in size only. That’s not the only measure of power, however.
“If you want to sell something, you go to the U.S. It has a huge trade-driven economy. It has so many different dimensions,” says Kroeber. “It will be misleading to look at size alone.”More at Benefits Canada.
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