The Forex Trading Course: A Self-Study Guide to Becoming a Successful Currency Trader, 2nd Edition

Chapter 4The China Factor

China is important to forex traders in evaluating currency-trading opportunities. This chapter provides a review of key China developments that every trader should know about.

Watching Chinese economic developments and data is likely to become a daily pastime for many traders all over the world. Almost every day there is news on China's economic performance. China's Gross Domestic Product surpassed 9 trillion USD in 2013 and within a few years, if growth continues to be above 7 percent per year, will surpass the US GDP. According to Trading Economics, China represents 14.9 percent of the world economy.¹

China's economic data are important to traders because any surprise impacts expectations regarding China imports and exports. Another way to look at China from a trader's perspective is that when China sneezes, the world catches a cold. China growth means continued or increased imports of key resources from in commodities and energy. By no means is China's growth guaranteed. China has in fact had a slowdown in recent years since its 10 percent annualized growth per year. In the current environment, its 7 to 7.5 percent annualized GDP is considered slow but acceptable growth. The slowdown in China's GDP is known as “the new normal.” The world has to get used to a China that is experiencing lower growth rates. The International Monetary Fund projects China's growth being just over the 7.1 percent target per year. At the same time, China's debt is approaching ...