Sleeping Giant -- the Bank of China.
"While China accounts for only 4 percent of world GDP, it has accounted for as much as 15 percent of the world's GDP growth and almost 20 percent of the growth in world exports and imports. These figures understate the importance of China's role as the locomotive for its neighbors, including Australia and Japan, which have become increasingly dependent on the 40 percent growth rate in Chinese imports. They also understate the importance of China as the dynamo for the boom in international commodity prices, including aluminum, copper, petroleum, and soybeans, which have helped keep Latin America's economies afloat. No less impressive is the importance that China is assuming in the international capital markets as its external sector has strengthened and as foreign capital has flooded into China. By April 2004, China's holdings of US Treasury bonds approached US$400 billion, while it now accounts for almost 12 percent of each new auction of US Treasury paper. Were China to withdraw from the US Treasury market for any reason, ripples would be felt globally as US interest rates would be forced sharply higher .. ".
MORE "When the Bank of China Wakes".
UPDATE: The Big Picture on how Chinese demand helps fuel the oil price spike -- and how Chinese banks are cooling the red-hot Chinese economic pressure cooker.
Posted by Greg Ransom
