The Extent of Dependence of the Economies of Germany and the United Stated of America on Economic Developments in China

The Extent of Dependence of the Economies of Germany and the United Stated of America on Economic Developments in China

Joseph L. Amisi

Grand Valley State University

Abstract

This paper explains, from a generalist point, why the economies of Germany and the United States of America are dependent upon economic changes in China and uses key facts from all three countries to demonstrate this dependence. The effects of China’s large population, availability of low-cost labor, stage of economic maturity and additional concerns such as foreign policy and level of foreign debt held are individually discussed, giving support to influence of the economy of China over those of both Germany and the USA.

Keywords: Germany, America, China, globalization, economic interdependence

The Extent of Dependence of the Economies of Germany and the United Stated of America on Economic Developments in China

China has emerged as a global industrial powerhouse in recent times. Since its socio-economic reconstruction and break from Soviet influence in 1958, the country has rapidly moved from a centrally planned economy to market economy, expanding rural incomes and attracting foreign capital in large amounts (Brandt & Rawski, 2008). In the current context of globalization – the shift towards an integrated and interdependent global economy (Hill, 2009) – China is a key economic player and changes in its economy will have effects on the global scale. It follows that the USA and Germany, the largest and fifth-largest economies in the world respectively, have interests in economic developments in China, the second-largest economy in the world. This paper identifies key facts about these three countries and explains, using these facts, the dependence of the German and American economies on that of China.

THE FEDERAL REPUBLIC OF GERMANY

Germany, the second most populous country in continental Europe, has its capital in Berlin. It has the geographical advantage of being centrally...