Friday, June 19, 2015

Why Chinese economy could outperform USA

Some people are very bullish about the dollar, and think it will stay strong for the next five to ten years. That is not my view. If the dollar continues to strengthen, the U.S. Federal Reserve will initiate another round of quantitative easing, QE4 or QE5, to lower the value of the dollar.

China would probably not take up such policy. If the Chinese currency appreciates against the Japanese Yen or the Euro, I don’t think it’s a disaster for China. Because China buys resources, processes them and sells them to the world. With a strong currency, it will be cheaper to buy resources from other countries. Therefore, my inclination is to think that the Chinese will not print money.