Forget Europe, China Is The Key

It seems like the market is divided between two camps right now. There are the bears who think the fiscal woes of Europe are likely to threaten the emerging global recovery, dousing it even before it really blazes. And then there are the bulls who quite frankly don't give a damn about Europe. In their mind, Europe is just a speck on an otherwise expanding economic landscape.

On Friday, one of the biggest bulls, Goldman Sachs economist Jim O'Neill chimed in with his thoughts before the long holiday weekend.  "The China-U.S. economic outlook is simply way more important than all this European stuff," he writes in a research note.

O'Neill's basic read is that a "much better tone" exists between senior U.S. policymakers and their counterparts in Beijing than earlier in the year. Among other things that have helped foster the better relationship is a recognition by the U.S. of the contribution of Chinese global consumption.

He puts the problems of the euro zone into perspective, saying that Goldman expects Chinese gross domestic product to rise by $7 trillion this decade, nearly two times its current size, two times the change in the U.S. and equivalent to the change in the U.S. and the other three BRIC countries--Goldman's moniker for Brazil, Russia, India and China--put together. Goldman expects Chinese GDP to hit $11 trillion by 2019.

Read more at Forbes