In a Fortune Global 500 list on the world’s largest companies based on revenue, in an unprecedented move, China came in higher than Japan. Despite this achievement, American firms still took the most positions on the list. Indeed, a staggering 132 companies from the United States were featured, with China as number 2 on the list, featuring 73 companies and Japan with 68.
Europe’s Impact
While Europe lost 11 companies in 2011 on the list, China gained 12. Nonetheless, as Fortune pointed out, even though there is a financial crisis in Europe, and Japan has encountered many disasters, the big international companies have continued to escalate in both profit and revenues.
Despite its lead position, America shouldn’t be sitting back on its laurels. The superpower should be aware of the fact that it was the only country to lose so many companies on the list over the last 10 years, having lost 65 headquartered companies throughout that timeframe. In addition, companies in China were showing post-crisis success in 2009, with a move to gas and alternative energy and away from oil. After a hard 2011 vis-à-vis investments, so far 2012 is going well, in America especially, but also noteworthy throughout the world.
East-West Currencies
Clearly connected to all this news is the fact that trading companies are not as enthusiastic about converting the American dollar to the Chinese Yuan. Indeed it is the US dollar that companies want to accumulate since it is strengthening. What happened was, that at the time the Yuan was increasing, rather than buy the US dollar and sell the Yuan to pay for imports, companies would borrow US dollars from banks so as to pay for imports, which shorted the US dollar, which was good since it was anyway the US dollar was weakening. Today the opposite is the case; traders are hanging on to US dollars for longer which impacts China’s monetary condition since its inflows force central bank intervention. China thus finds itself in a strange place, with its domestic economy requiring easier monetary condition but flows leading it in the opposite direction.