If there is another american financial crisis, it would only strengthen China's economy.

  Depending on what this financial crisis is, the dollar would most likely strengthen. A fall in the dow jones, would force the value of financial and business assets to collapse. But what are they collapsing against? If the dow is at 14,000 points then that is an indication of a weaker dollar. If the dow is at 6700, that is an indication of a stronger dollar. Since the dollar would be able to purchase more stocks at 6700 than it would if stocks were expensive at 14,000.

 If prices for goods and services are deflating it is most likely due to a drop in consumer spending. Businesses would then most likely be contracting and a higher level of labor finding themselves unemployed. This would extend China's lead over the us in a real sense given that the service sector is dwindling down. The dollar may or may not strengthen against the RMB during a recession but the contraction of the total dollar supply would mean a total GDP contraction. Since an appreciating dollar against a basket of goods does not make up for the total loss of dollars due to a reduced level of fractional reserve lending.

Top Biz News
China: World's biggest auto producer, consumer
(Xinhua)
Updated: 2010-01-12 15:37


Official figures Monday confirmed China had overtaken the United States to become the world's top auto maker and market in 2009 boosted by government stimulus measures.

The China Association of Automobile Manufacturers (CAAM) announced annual sales rose 46.15 percent year-on-year to 13.64 million units. Output increased 48.3 percent to 13.79 million units.

Passenger car sales were up 52.93 percent to 10.33 million units, and production was 10.38 million units, up 54.11 percent year-on-year.

   For instance, it had always been anticipated that China would overtake the us in total amount of automobiles produced and consumed. But when it was supposed to occur depended heavily on Chinese and american rates of growth. If China is growing 10 percent a year and the us is growing 3 percent a year, it wouldnt take very long for Chinese levels of auto production to exceed the united states. However if China is growing 10 percent a year and the us actually contracts 3 percent a year, then it makes overtaking the us that much easier.