China makes up a relatively small (less than 10) percentage of world trade. Yet to listen to what is going on in the FX market particularly, one would think that their influence is much greater. Have a look at the type of goods which China produces in comparison to Germany or Japan, and you really get an idea of how overly inflated China’s importance is. It is not China which is going to maintain the global economy, but rather Europe, the US and Japan. Certainly China has great importance to commodity-based economies like Australia and they do hold a lot of US-denominated assets but I think we need to think long and hard before basing our trading strategies on what China may or may not do.
And remember, China is a massive bureaucracy with mountains of red tape and their economic statisticians were individually trained by another great fiction writer, Agatha Christie or at least her Chinese equivalent!
