With the rest of the world’s economy on lockdown and in a severe recession, it’s amazing to see that China, one of the world’s largest and most prevalent consumers of commodities has reported a huge GDP growth for Q1. This growth could signal that the Chinese government and labor resources have been able to tiptoe around the global economic slowdown by maintaining a huge labor resource pool.

If China’s demand for raw goods and the rest of the world’s demand for Chinese produced products continues in an upward trend, then the US recovery could be in real trouble in the short term. Currently the US export market has been shrinking every quarter since 2007, and with no real tangible exports left to lift up and lead an economic upswing, the idea that China has taken the US’s place as the world’s number one exporter is very troubling. Even England, whose country was built on production of goods from raw materials that were gleaned from every corner of its empire, stands to suffer from this concept.

If the US and other countries like the UK, Germany, and France are to have any real chance at beating China at its own exports game, a real economic sea change needs to occur. These countries need to bring back the production and manufacturing jobs they have lost in the past two decades to China. This news also makes it that much more evident that the US Government is right to bail out US automakers like GM, Chrysler, and possibly Ford. At no other time in history has domestic production been so key in reclaiming the US and Western Europe’s hold over world markets.

Another scary product of China’s economic growth in the wake of a global depression is the fact that they have been encouraging all countries to adopt a new reserve currency to replace the US Dollar. China has even suggested that gold be the new reserve currency and that money be backed up with the precious metal. And since the Chinese government has been buying up large quantities of gold over the past decade and a half, it’s no wonder that they would love to see the world’s reserve currency switched to something they have a large supply of and whose demand would be greatly increased due to the fact the Chinese economic growth puts all commodities, even gold, in high demand. They could potentially jack up the prices and value of their own reserve currency. So if you’re an investor with a heavy position in precious metals, Chinese growth is likely to drive values in that sector ever higher as demand is increased.

The moneychangers have finally been crushed by their own greed. Wall Street is now the favorite scapegoat for Americans looking to blame the current economic crisis on a specific group of people. Now the pendulum has swung back to favor those with raw materials and resources; and China has the largest supply of one of the most valuable and desirable resources of all, labor. It’s no wonder that with their huge labor pool China was able to squeak out a gain in their GDP. It will be interesting to see how they perform in the next quarter, and it will likely give a good indication of where the rest of the world stands in the race to recover from this recession.