Deloitte- China & India-The Reality beyond the Hype

Why did the price of oil and other commodities rise in the last five years? Why is the US able to fund a massive external deficit without an increase in interest rates? Why have global prices of manufactured products declined in the past decade relative to other products and services?
The answer, in part, to all of these questions is simple: China.

Its emergence as a global power via its integration into the global economy has had significant implications. China’s strong growth has contributed to higher oil prices. Its policy of maintaining a low valued currency has meant accumulating dollars and thereby funding the US external deficit. And its massive investment in manufacturing capacity has put downward pressure on global prices and margins.

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