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Jeremy Frommer, CEO of Hedge Fund LIVE Jeremy Frommer has 20 years of industry experience and is currently responsible for general management and leadership of the General Partner. Previously, Mr. Frommer was a Managing Director and Head of the Global Prime Services Group (“GPS”) at RBC Capital... More
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  • China to surpass US sooner than expected  0 comments
    Apr 26, 2011 9:07 AM

    The IMF is now predicting that China will pass the US, as the world’s number one economic power, within five years. That should come as a big shock, seeing that most experts were predicting it to happen in about twenty years. The US has definitely slowed as the world’s true number one, thats for sure. The problems facing the US are well-known, it has fallen off as a manufacturing power, sending jobs to third world countries and also to China.

    While outsourcing jobs does not necessarily hurt the GDP, it does negatively impact employment rates. At the same time, the employment situation in China has boomed due to influx of jobs from other countries. It’s sad to know that the US will not be the dominant economic force in the near future. The real trouble for Americans is more likely themselves. I don’t know of any large groups of people that will take massive pay cuts and work longer hours in worse conditions just to help the US stay ahead China. We have become used to an increasingly comfortable lifestyle, but quite honestly I don’t really care. It doesn’t make a difference if the US is first, second, or third economically. With the growth in emerging economies, there will always be someone out there to buy products and services from the US.

    The real reason the headline shouldn’t scare you, is that China will face the same short-term problems the US will, but likely be hurt more. Sky high oil prices will hurt a manufacturing-based China; but the service-based US will continue to power forward. Also, the release of the Yuan, to floating rather than fixed, will most likely cause the the currency to appreciate which will hurt their export/import results. 
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