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Market Turmoil Highlights China’s Impact on U.S. Economy

Global stocks largely rebounded on Tuesday after concerns over a weakened U.S. economy sent international markets tumbling. Jim Fallows of the Atlantic Monthly discusses how China's lending and asset buying impact the U.S. markets and economic stability.

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    Now, the China angle to the world markets story, and to Jeffrey Brown.


    For the past year-and-a-half, James Fallows has been living in China and reporting on the vast economic and social changes there for the Atlantic magazine. His latest article, titled "The $1.4 Trillion Question," looks at China's increasing ties to U.S. financial markets.

    Jim Fallows is back home for a visit and joins us now.


  • JAMES FALLOWS, Reporter, The Atlantic:

    Thank you very much.


    And it's quite a week to be here.


    It certainly is.


    How does what we've been seeing this week, all that volatility, look to the Chinese? What do they see?


    Well, of course, I've been away for four days now so my impressions may be out of date, but I think it's a very interesting change of mood for the Chinese.

    You know, China has terrible economic problems, as everybody knows. It has rich and poor; it has pollution problems. But there's been a very striking economic confidence, at least during the year-and-a-half I've been there.

    The stock market has gone up and up and up. I think the Shanghai Exchange almost tripled in value during the time I was there. And so there's been a sense that everything could be managed in a positive way.

    And time and again, I heard people say, "Oh, yes, the stock market will keep going up all this year because of the Olympics or because it's a lucky year or whatever." So they have suddenly this experience with real financial markets and their ups and downs. I think there's a certain loss of innocence for the Chinese.