Much has been made of the link between the surge in commodity prices in recent years and the explosive growth in Chinese demand. The attached graph of that nation's value-added industrial output versus the monthly closing price of oil and copper shows just how synchronized the relationship has become.
click for a larger chart
Chart courtesy of Michael Panzner
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The CRB index of industrial commodity prices has always been the single best leading indicator of crude oil prices. Of course, this would support the argument that rising oil prices are just one way inflationary pressures show up and that there is nothing special about oil except it plays a much larger role in the economy then other commodies.
Posted by: spencer | Apr 27, 2005 9:27:20 AM
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