In the past six years, the Chinese economy has started to have a material impact on global GDP growth. Over the 2004-2010 period, China's GDP correlation with global GDP correlation has improved with the R Square rising to 40% from 14% in the 2000-2004 period and 1% in the 1980-2000 period.While the U.S. and European economies, which together account for half of global GDP remains the biggest drivers of the global economy, China's impact on growth is getting larger over recent years.
Being the second largest economy in the world, one would have thought that China's correlation with global GDP would have been higher. But the rebound in the U.S. and G7 economies from the recession of 2009 has pulled up global GDP by a bigger swing than the rebound in China, which is estimated to have grown by 10% in 2010 versus 9.2% in 2009.
