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China, Europe, USA stock market correlations

International Stock Market Correlations

In the top League of geopolitics alliances between States can be only tactical. In the fight for the main "prize" – a world leadership – there are no allies, only competitors. In the language of the "Book of Changes" ("Yijing"), China and the US in the geopolitics and international stock market correlations are akin to Yin and Yang. In this scenario, "black" Yin is, of course, the United States ("Empire of Darkness"), and "white" Yang – "Empire of Light", that is China. Modern geopolitical struggle in no small measure dictates this opposition of the largest economies in the world. All the other players have to manipulate between Yang and Yin.

China - Europe - USA stock market correlations

The USA. Although it is still the most developed nation in the world, now it is economically vulnerable. Nevertheless, they firmly hold the military leadership. China, on the contrary, is militarily behind the West but feeling more confident economically. Its economy continues to grow. However, it is still a developing economy, not fully gone through modernization yet. Also, it has a number of structural problems and needs in the transformation of the growth economical model.

The USA as the leader of the world's "Golden billion" strives to maintain world hegemony. And here Washington must face the problem in the form of informal Association of the BRICS, which consists of countries, where the economic model of deterrence does not trigger. First of all, it is about China, whose uncontrolled development could create problems of stability of the Dollar. Furthermore China, in turn, to counterbalance the American hegemonic plans has consistently supported the concept of multipolarity, which was also joined by Russia. Both China and the United States established a strategic dialogue. Beijing and Washington continually declare the desire to negotiate, but in fact, this game is on who, ultimately, will replay.

While promoting its objectives China traditionally relies only on its own forces. But in order to beat the US on certain issues the great geopolitical game, is trying to play on the contradictions between different Western players. For example, leading a fine game on the contradictions between the United States and Britain. Another line – the game with Western Europe with the aim of strengthening its position among the Eastern European "tigers", etc.

Europe, anyway, is the nearest geopolitical player of the weight, which is capable to help China to influence America. Brussels in his quest to free himself from the tutelage of Washington is forced to look to the East, seeking compromises with Russia and China. Of course, this is because a bundle of Europe–Russia–China could outweigh the hegemony of the United States. And, of course, the leadership in this "bundle" would be guaranteed to Europe. To everything else, the position of the Euro currency would be stronger, which could shift the Dollar from the pedestal.

However, such euro plans never destined to be realized in practice: the global crisis has undermined the victorious March of Europe. That’s why the US, knowing well the full vulnerability of its position, while making an anti-crisis response, first and foremost began to tame the shrew Brussels, pulling on the Euro-Atlantic leash. As a result, to date, Washington has already secured its dominance over Europe. However, China and Russia because of the crisis are also not particularly eager for alliances with Europe, focusing on strengthening its position in the near borderline.

By Chieffinancing 25.07.2016

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