Predictions continued ~ China

"Unexpected drop in China's imports and exports
By Andrew Jacobs and David Barboza

According to statistics released by the Chinese government Wednesday, exports fell 2.2 percent from November 2007 to November 2008 the largest year-over-year monthly decline since April 1999.

Imports to China also plunged sharply last month, falling 17.9 percent and widening China's trade surplus to a record $40 billion, from $35.2 billion in October.
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In a survey of more than a dozen analysts last month, no one predicted that imports would decline. The drop in exports stretched across all major trade commodities with steel leading the downward spiral.

Chinese imports fell 17.9 percent in November and China's trade surplus widened to a record $40 billion! Meanwhile exports only fell 2.2 percent!"

China's trade surplus was $262 billion in 2007. If we multiply China's $40 billion November surplus by twelve months, we get a $480 billion annual trade surplus, nearly twice the 2007 number! If this went on China's trade surplus in 2009 would be near a trillion.

Over Christmas, China announced its intentions to make the yuan an international currency! You have the Chinese central bank quoted as saying that, "The US dollar is unlikely to be stable next year". How much more evidence do you need to figure out where all this is going?

as per my predictions of this year, strong household balance sheets and a trade surplus puts china firmly in the strong economy catagory. The Chinese have a great capacity to expand the domestic economy.

One possible strategy would be fiscal stimulus and to combat the inflation otherwise caused let the yuan rise.