China: Contagion Or Contained?

Is the Chinese economy a "ticking timebomb"? Annex Wealth Management's Chief Economist Brian Jacobsen takes a look.

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China: Contagion or Contained?
Welcome to the Know the Difference Minute for Tuesday, August 15th.
US activity seems to be purring along while China’s is sucking wind. The US is the locomotive while China is the caboose of global growth.
Is there contagion risk from China’s slowing growth? Is it, as President Biden has said, “a ticking time bomb?” Probably not.
China’s struggles have been well telegraphed and, generally, when something is in the newspaper, it’s too late to trade profitably on it.
Long-term, a risk is where their government hamstrings growth by picking winners and losers and misallocating resources. A more immediate risk is through their exchange rate. Historically, when a government tries to control its exchange rate, when it allows a big change, that can send bigger ripples and waves. That’s what happened in 2015 and 2016 when China was grasping at straws to stoke growth. Contagion is contained, at least for now.
I’m Brian Jacobsen, Chief Economist at Annex Wealth Management. That is your Know the Difference Minute.